Here’s a quick digest of the main announcements relevant to small business from November’s Autumn Statement, plus a recap of previous announcements coming into force early in 2016.
New Announcements—Good news
- Small business rate relief will be extended for another year to April 2017 —good news for many of our clients renting business premises
- From April 2017 there will be an apprenticeship levy on the largest employers to help fund training and skills programmes. The levy will be 0.5% of ALL employers’ wage bills, but with an allowance of £15k meaning that only if your wage bill exceeds £3m annually will you pay. None of our clients are in this band (yet!).
- Tax relief on travel and subsistence for contractors. In the July Budget a consultation was announced regarding restriction of the right for contractors to claim their costs of travel and subsistence to bring them in line with employees who can not claim commuting costs. The good news is that it would appear this has softened to only include those contractors who operate through an employment intermediary (umbrella company) or those who are caught under IR35 anyway. Changes will be effective from April 2016. As long as you contract direct with the end client you should be safe—if you contract via an intermediary, I would expect them to advise you of the precise status. If they don’t can I politely suggest that you ask them as they should be aware whether their contractors are caught by this or not.
New Announcements—Bad news
- Stamp duty on the purchase of second homes or buy-to-lets will increase from 1 April 2016 to 3% above the usual rate.
- Company car tax—the 3% diesel supplement which was to have been phased out will now be retained until at least April 2021.
Previous announcements now imminent
- Changes to dividend taxation from April 2016—this will hit our client base quite hard. We will be offering full tax strategy reviews to our clients during January and February so that you can reasonably act prior to the end of this tax year. Please contact us if this is of interest to you.
- Employment Allowance. This is due to rise from £2k to £3k from April 2016 BUT will no longer be claimable by single-director payrolls. Some of you may amend your salary strategy accordingly
- A National Living Wage of £7.20 / hour comes in in April 2016 for all employees aged 25 or over. Current National Minimum Wage rates will apply to those under 25 years old
- The personal tax-free income allowance increases to £11k from April. The level of income at which higher rate tax is paid rises to £43k.
- The pensions lifetime allowance falls to £1m from April 2016; there will be further restrictions to the annual pension allowance too; the £40k annual allowance reduces to £10k on a graduated scale for incomes between £150k and £210k. If you need advice on this area we can point you in the direction of a trusted IFA
- The annual investment allowance will be set at £200k from 1st January 2016 and will stay at that level for the remainder of the parliament.