A new tax year starts on 6 April 2017, and various changes take effect on that date which you need to know about.
1. Ensure your employees have the correct tax code
The personal allowance increases to £11,500, and the higher rate income tax threshold increases to £45,000. This means your employees will take home more of their monthly salary than they did in the previous tax year.
2. Ensure you are paying the correct hourly wage
The National Living Wage rises to £7.50, in line with the pledge made by Philip Hammond in the autumn statement.
3. Consider changing to cash basis accounting
The entry threshold for cash basis accounting increases from £83,000 to £150,000. If you are a trading business with straightforward tax affairs, this is a simplified way to calculate your taxable profits (it’s optional).
4. Pay less corporation tax
Corporation tax reduces from 20% to 19% in 2017, and to 17% in 2020, meaning the UK will have the lowest corporation tax rate in the G20.
5. Note changes to business rates
As we have mentioned before, business rates increase – but £435 million relief has been made available to help ease the transition:
- £300 million discretionary relief is available from local authorities to help businesses most affected by the revaluation
- Pubs with a rateable value up to £100,000 can claim £1,000 discount for one year
- No small business will pay more than £600 more in business rates this year than they did last year
6. Prepare for Making Tax Digital (MTD)
The VAT threshold rises from £83,000-£85,000.
Businesses with a turnover below the VAT threshold were going to have to submit tax information online by April 2018 – this has now been deferred for one year.
This means SMEs have more time to plan and prepare. It also gives software providers more time to update their products to cope with recording and submitting digital tax reports.
7. Welcome funding to improve digital and physical infrastructure
In the spring budget, the Chancellor announced:
- £200 million for local broadband networks
- £90 million to improve transport in the North of England
- £23 million to address pinch-points on roads in the Midlands
- £16 million for 5G mobile technology
This investment should help improve road networks and broadband connections across the country, and help boost productivity for SMEs.
In the current climate including planning for Brexit, we encourage all businesses to review opportunities, potential government support and cost-saving initiatives.