Guidance on the impact of the Budget 2017 on small businesses and contractors.
Reduction in dividend allowance
Currently an individual may receive up to £5,000 in tax free dividend income each year and from April 2018 this allowance will be reduced to £2,000.
Making tax digital
For sole traders and partnerships with annual sales that are above £10,000 but below the VAT registration threshold, the timeline for MTD implementation has been pushed back from April 2018 to April 2019.
Cash basis for business accounts
From 6th April 2017 unincorporated businesses may use the cash basis for preparation of their accounts if their sales are under £150,000 a year. Unincorporated businesses who are already using this basis may continue to do so until their sales reach £300,000 a year.
VAT threshold increase
The VAT registration threshold will increase from £83,000 to £85,000 on 1st April 2017. The threshold for deregistering for VAT will see a corresponding increase from £81,000 to £83,000 at the same time.
This allowance was originally introduced in 2014 to help employers reduce their employer NI bill. Despite restrictions to one person companies claiming the allowance, HMRC are concerned that some businesses are using avoidance schemes to avoid paying the correct amount of NI contributions. HMRC will be monitoring whether this avoidance continues.Share this: