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Spring Budget 2017 – what contractors need to know

Following the Chancellor’s first and last Spring Budget on 8 March 2017, many will be thankful that the landscape has not changed more drastically. The Budget primarily confirmed the changes announced in the Autumn Statement, with only a few new measures that will affect Limited Company contractors.

 

We have today emailed our clients with our full report on the Budget announcements and how they may be affected. Please see below for a summary of the key points and contact us to find out more about becoming an Intouch client and benefiting from our expert advice tailored to your personal circumstances.

 

Key Spring Budget points for Limited Company contractors:

  • Dividend Allowance: An announcement that didn’t appear in the Autumn Statement – a reduction in the tax-free Dividend Allowance from 6 April 2018. The allowance will reduce from £5,000 to £2,000.
  • ISA savings limit: The Chancellor counter-balanced the Dividend Allowance changes by also announcing that the overall ISA savings limit will jump to £20,000 in 2017/18, from the current limit of £15,240 for 2016/17.
  • Off-payroll working in the public sector (IR35): Whilst some minor changes to the draft legislation have been made, the measures will become effective on 6 April 2017.
  • VAT Flat Rate Scheme (FRS): As announced in the Autumn Statement, changes to the VAT Flat Rate Scheme (FRS) will come into place on 1 April 2017 with the introduction of a new ‘limited cost business’ category.
  • New measures to tackle tax avoidance and evasion: A selection of measures has been announced, with the most notable new measure applying to those that enable tax avoidance schemes. A new Enabler penalty will apply when tax avoidance schemes are found not to work.
  • Corporation Tax: As pre-announced, the main rate of Corporation Tax will be reduced from 20% to 19% for the Financial Year beginning on 1 April 2017.
  • Corporate Gains Tax: The CGT annual exemption will be increased to £11,300 for 2017/18 from £11,100 for 2016/17.
  • Making Tax Digital for Business: Extensive changes to how taxpayers record and report income to HMRC are being introduced under a project entitled Making Tax Digital for Business. The Spring Budget announced a one year deferral from the mandating of MTDfB for unincorporated businesses and unincorporated buy to let landlords with turnovers below the VAT threshold (£83,000).
  • New consultations announced: Those notably likely to affect contractors include consultations on Rent a Room Relief, disguised remuneration (again), employee expenses and Benefits in Kind.

 

Further information

 

Still got questions? Our Personal Accountants are available right now to give tailored advice to our clients on how these announcements will affect them. Contact us to find out more about becoming an Intouch client.