This week the Chancellor gave us the Spring Budget, and with the new tax year fast approaching, here’s what it means for your business.
For information on how the new tax year affects you personally, please have a look at our blog post on this very subject.
You might also want to download our App, which has the very latest tax rates and allowances, and lots of handy calculators too.
We have also written a handy blog on the 5.5 Top Tax Tips to consider as we approach the end of this tax year.
1. Corporation tax remains at 19%
The rate dropped in April 2017, and there is no higher rate.
2. Annual investment allowance remains at £200,000
This means that you can spend up to £200,000 in this and the new tax year on eligible business assets, including plant and machinery, commercial vehicles etc. This means that the full cost of any purchases up to £200,000 will reduce your taxable profits and your business tax.
For example if a limited company purchased a van for business use for £10,000, this will reduce it’s corporation tax by £1,900 (£10,000 x 19% corporation tax)
For many small and micro businesses this means that pretty much all eligible business assets purchased will reduce their taxable profits
3. The VAT Registration Threshold remains at £85,000
Many people talked about a reduction to the VAT threshold. Although this hasn’t happened, you could still see this as a reduction of sorts, as the threshold normally increases each year.
4. Directors’ Salaries
In line with the rise in income tax and national insurance thresholds, directors can now receive a pay rise up to £11,850 (£987.50pm) or £8,424 (£702pm) if you did not want to pay NIC, but still be entitled to statutory benefits and state pension.
Top Tip: Have a look at our blog on What the New Tax Year Means for you Personally
5. National Living Wage for over 25’s increases to £7.83 on 1 April 2018
National Minimum Wage applies to under 25s as follows:
Aged 21 to 24 £7.38
Aged 18 to 20 £5.90
Under 18 £4.20
6. Apprentice Rate rises to £3.70 on 1 April 2018
This applies to under 19s or those in their first year of apprenticeship, apart from over 25s, who are paid the national living wage.
7. R & D Rates remain unchanged
If you have less than 500 staff, and less than 100m euro turnover, you can claim SME R & D relief:
130% extra deducted from your taxable profits on your R & D costs
Or a tax credit if you’re making a loss.
Top Tip: Keep an eye on our blogs…upcoming R & D blog…
8. Business rates will increase in line with CPI* instead of inflation
Small business rate relief still applies if your property’s rateable value is less than £15,000
*consumer prices index
9. Making Tax Digital delayed until April 2019
This will only apply to VAT registered businesses, and means that you must file quarterly returns online. This means filed online directly from online software, and uploading from manual records won’t count.
Top Tip: We work best with you and Xero Beautiful Accounting Software. This will help you to manage your whole business onine, from wherever you are.
10. Landlords and Mortgage Interest
From April 2017 HMRC are limiting mortgage interest claimed against rental income for higher rate tax payers. This will be phased out completely by 2020/21.
Please see our 5.5 Top Tax Tips for more info on how HMRC are phasing this out, and what you can do about it.
Top Tip: On the plus side, as a landlord you can now claim mileage for journeys to and from your rental property, at 45p per mile.
I hope you found the above facts useful, as always do get in touch to discuss any of the points mentioned. Please keep an eye on our blog page for more useful posts!
Thank you for reading!
Kinder Pocock are an approachable cloud-savvy firm of accountants based in Herefordshire but supporting businesses on the move.
We specialise in Security, Technology, Coaches and Speakers, Design and Indie Retailers.
Contact Us to see how we can help