2017 Budget Highlights
- Personal allowance from 06/04/17 is £11,500 and rising to £11,850 from 06/04/18. This is the amount you can earn in a tax year without paying any tax.
- Income Tax for 06/04/17 to 05/04/18 - Basic rate (20% tax) paid on earnings up to £45,000. Higher Rate (40% tax) paid on earnings from £45,001 to £150,000. 45% tax paid on earnings over £150,000.
- Class 2 national insurance contributions (NIC) for self-employed to be abolished in 2018. This will only affect the self-employed. Talks of combining Class 4 and Class 2 NIC for a 'new' NIC band.
- Transferable married couples tax allowance is £1,150.
- Capital Gains Tax - From April 2017 the rates are 20% for higher rate tax payers and 10% for basic rate tax payers. The tax free allowance is currently £11,300 (tax year 2017/18).
- HMRC to introduce Digital Accounting for the self employed and Landlords. This will introduce quarterly accounting and taxation. More details to be announced.
Savings from 6th April 2017:
- For basic rate (20%) tax payers your first £1,000 of savings interest earned will be tax free. For higher rate (40%) tax payers your first £500 will be tax free.
- ISA savings tax free allowance is currently £20,000 per annum.
- The government is bringing in legislation to try and reduce the number of landlords taking out mortgages to purchase buy-to-let properties. From April 2017 HMRC is reducing the amount of mortgage interest paid by landlords that can be offset against rental income. For Basic rate tax payers (those earning up to £33,500 (£45,000 less £11,500 personal allowance) in the 2017/18 tax year) there will be no change. For those earning over £33,500 the tax relief you will get on your mortgage interest payments will only be at 20%, not the 40% you are currently receiving. This is being phased in and will be complete by 2020.
- Use of "personal service companies" by public sector employees to reduce tax liabilities to end
- Corporation tax to be cut from 20% to 17% by 2020.
Self Assessment Filing Deadline
You only have until the 31st of January 2018 to submit your tax return for the tax year 06/04/16-05/04/17. Any delay will result in an automatic fine of £100. You then have to pay any tax owing (for 2016/17 and your first payment on account for 2017/18) also by the 31st of January 2018. HMRC will no longer be accepting credit cards as a payment method.
Invoicing Your Customers
Whether you are self employed or running a Limited Company, make sure you get the details on your invoice correct. Ensure you include all necessary information and you are complying with the law. Always include payment terms so your customers know the 'score' so you are more likely to receive payment for your goods or services on time.
For more details see: http://startups.co.uk/running-a-start-up-business-heres-how-to-get-your-....
Cash Accounting Scheme
This has been available from the 6th of April 2013. It is a Government scheme to help simplify the accounting for small business's. Business's will only record income or expenditure only when they are received or paid. This will usually help your cash flow and probably reduce your tax. i.e. you will not need to include any income invoiced just before your year end which has not been received.
Limited companies are excluded from the scheme.
There are some disadvantages in entering the scheme. Namely, you can not claim any bank loan interest repayments as business expenses. There are others.
Contact us if you require help with any of the above.