• Increasing the planned the point at which people pay tax to £12,500 (National Insurance has lower thresholds)
• Increasing Annual Investment Allowance to £1m for 2 years
• Freezing the VAT registration threshold for a further 2 years at £85,000
• Increasing living and minimum wages
• Confirming the planned reduction in Corporation Tax to 17% in 2020
• Confirming major changes to the IR35 regime

​The papers which support the budget often contain far more than what is actually said on the day and it is clear that there will be further consultations on VAT and the implementation of the IR35 changes.
 
I’ve also produced an audio recording of my commentary on the budget!

The new £50,000 does create somewhat of a cliff edge, as at £50,000 earnings you will:

• Pay higher rate tax
• Start to lose your child benefit
• Lose some savings allowance

 
The thresholds at which people pay National Insurance have not risen as significantly so employees and sole traders can still expect to pay National Insurance even if there is no tax to pay. The threshold will be £8,632.
 
Class 2 National Insurance (at £3 a week) will continue to be collected as part of the Self Assessment process and now will continue as the Class 3 alternative would have been costly to low earners.
 
Clients working for large organisations through ‘personal companies’ could see a major change in their taxation from April 2020 as HMRC seek to tax them as being employed rather than as a freelancer.  These rules were piloted within the public sector this tax year and will be rolled out to larger organisations.

The VAT threshold will continue at £85,000 – it is widely anticipated that following the UK’s departure from the EU, a taper system may be introduced for lower turnover businesses to start paying some VAT.

National Minimum and Living Wages will increase from April 2019.  


​The changes are as follows:

• Increase the living wage from £7.83 to £8.21 per hour
• increasing the rate for 21 to 24 year olds by 4.3% from £7.38 to £7.70 per hour 
• increasing the rate for 18 to 20 year olds by 4.2% from £5.90 to £6.15 per hour 
• increasing the rate for 16 to 17 year olds by 3.6% from £4.20 to £4.35 per hour
• increasing the rate for apprentices by 5.4% from £3.70 to £3.90 per hour

 
It is important you review all employees on the payroll to ensure you are compliant.  With ‘RTI’ payroll reporting in place it would be very easy for HMRC to spot non-compliant employers and indeed a number of businesses have already been fined, named and shamed.
 
There were changes to Employment Allowance but these are unlikely to affect most clients. It is vital if you are a single director company that you do not claim this (even if HMRC basic tools or your software allows it)as HMRC are now carrying out compliance checks in this area and are set to collect underpaid National insurance.  ​

I’ve been doing some work with a programme called ADVenture in Bradford which is designed to help businesses under 3 years old with:

• Training
• Funding
• Loans

I’m running a finance course in November but in the meantime if you’re looking to grow, the following link might be useful!
https://www.bradford.ac.uk/management/working-with-business/support-for-business/ad-venture/

Believe it or not the ICAEW’s latest statistics show that 82% of businesses are still logging onto the HMRC gateway to complete their VAT returns with the remainder filing directly from software.  

More worryingly around half of the businesses surveyed by the ICAEW had no idea this was changing.

From 1 April 2019 businesses caught by the rules will be required to:
​

• Maintain their accounting records digitally in a software product or spreadsheet, and
• Submit their VAT returns to HMRC using functional compatible software – i.e. not the gateway

The burning question therefore is, who and what does this apply to?

• Only VAT registered businesses;
• With turnover of more than £85,000 (so if you voluntarily registered this may not apply but you can elect to join in the scheme);
• Your first VAT return period starting on or after 1 April 2019.

 
Once your turnover in the preceding 4 quarters exceeds the £85,000 threshold then you need to join the scheme and if your turnover falls below the limit you don’t exit the scheme.  HMRC have prepared a list of software what is compatible with the new regulations:
https://www.gov.uk/government/publications/software-suppliers-supporting-making-tax-digital-for-vat/software-suppliers-supporting-making-tax-digital-for-vat
 
Income tax and Corporation tax will follow in a year or two’s time.
 
I’ve prepared a short video to help you prepare... See Below.

​The current weekly for 2018/19 is £2.95 and is based on whether profits are at least equal to the small profits threshold of £6,205 and the number of weeks of self-employment in the year.  This is paid alongside your tax bill on 31 January.  

Voluntary contributions may also be paid if profits are below the threshold.  The original plan was to abolish Class 2 National Insurance from April 2019 and potentially merge them with Class 4 which runs at 9% of profits.  Class 4 does kick in at the higher level of £8,424.

There has however been a further announcement made (September 2018) by the Exchequer secretary to the Treasury that the government will not proceed with the Class 2 changes following a review of evidence concerning the impact on self-employed individuals with low profits.  In short, the weekly contributions will continue to be collected as part of your tax return.
 
The fear was that people who are below the threshold who still want to pay the £2.95 would have had to pay significantly more to access Class 3 National Insurance at £14.65 per week.