Philip Hammond today delivered his Autumn Budget, outlining what we can expect from April 2018. As we move towards the new Fiscal timetable, the Chancellor delivered some good news for taxpayers, including small businesses and the self-employed.
- £3bn set aside for Brexit preparations, “preparing Britain for every possible outcome.”
- Increase in National Living Wage to £7.83 from next April.
- Personal tax-free allowance to rise to £11,850 in April 2018, with the higher rate threshold rising to £46,350.
- VAT registration threshold to remain at £85,000.
- Stamp Duty Land Tax abolished for all first time buyers on homes up to £300,000.
- Investment promised in housing, construction, transport and technology.
- Additional commitment of resource funding of £2.8 billion to the NHS in England.
- Business Rates increase to be linked to the CPI rather than RPI from April 2018, 2 years earlier than planned.
- Tax avoidance measures to be introduced to save £4.8bn by 2022-23.
- Further action to address online VAT fraud, which costs the taxpayer £1.2 billion per year, by making all online marketplaces jointly liable for VAT.
- Local Authorities to be given the power to charge a 100% Council Tax premium on empty properties.
Let’s take a look in more detail at those areas affecting you.
Good news for small businesses
At £85,000, the UK’s VAT registration threshold is the highest in Europe, and it had been rumoured that VAT reform was to be announced. However, Mr Hammond instead vowed to keep the registration threshold at £85,000 for at least two years, stating that, “such a high threshold also has the benefit of keeping the majority of small businesses out of VAT altogether. So I am not minded to reduce the threshold.”
Of course, we also have a much welcome change in the form of an increase in the Personal Allowance in April, meaning more money in your pocket.
No changes to IR35 in the Private Sector
Noticeably absent from Mr Hammond’s speech was any mention of IR35. Since IR35 reform in the Public Sector, the government’s early indications are that public sector compliance is increasing. Many thought that a move to the Private Sector was on the cards. Although no announcement was made by the Chancellor, the government have said they, “will carefully consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms”.
External research on the topic is due to be published next year.
In response to Matthew Taylor’s review of employment practices in the modern economy, the government are due to work with stakeholders to publish a discussion paper on employment status, with the aim of making employment status tests clearer.
Much has been made of the tax gap, with the government committed to tackling tax evasion, avoidance, and non-compliance.
Mr Hammond announced that the government are investing a further £155 million in additional resources and new technology for HMRC to:
- further tackle those who are engaging in marketed tax avoidance schemes
- enhance efforts to tackle the enablers of tax fraud and hold intermediaries accountable for the services they provide using the Corporate Criminal Offence
- increase their ability to tackle non-compliance among mid-size businesses and wealthy individuals
- recover greater amounts of tax debt including through a new taskforce to specifically tackle tax debts more than 9 months old
As further anti-avoidance measures are introduced, we will undoubtedly see the emergence of solutions promising to ‘work around’ new rules. As discussed previously, it is more important than ever to remain compliant, as we see more and more providers pushing the boundaries of the law.