Spring Budget 2017 – What you need to know

In yesterday’s Spring Budget 2017 the government announced that its aims are to:

  • help young people from ordinary working families across the country get the skills they need to do the high-paid, high-skilled jobs of the future, vital for a competitive workforce,
  • give more children the chance to go to a good or outstanding school that sets them up to succeed,
  • support the social care system with substantial additional funding, so people get the care they deserve as they grow older, and support both local NHS plans and improvements to Accident and Emergency with new capital investment,
  • invest in cutting-edge technology and innovation, so Britain continues to be at the forefront of the global technology revolution,
  • continue to bring down the deficit so the UK gets back to living within its means.

I think most of us will read that with cynicism, and we want to cut through the chancellor’s jibes and digs at the opposition and find out how we’ll be affected.   There was little in the way of surprises, or measures to help small businesses.   I’m not going to address every aspect of the budget, but here is a brief round up of the main headlines relevant to small businesses:

Income Tax

From April 2017 the personal tax allowance will be £11,500. The higher rate threshold increases to £45,000.

National Insurance

For self-employed people:  from April 2018 class 4 NIC increases from 9% to 10% on taxable profits above the lower profits limit.  The lower profits limit in 2017/18 will be £8,164.  Class 2 NIC will be abolished from April 2018.

Self-employed people earning a taxable profit of over £16,250 will pay more NIC from April 2018.

Making Tax Digital

From April 2018 small businesses must to report financial data to HM Revenue and Customs quarterly.  This won’t be implemented until April 2019 for those with a turnover below the VAT threshold.   Businesses with a turnover of £10,000 or less will not need to change to quarterly reporting.

VAT

The registration limit will increase to £85,000 from April 2017, and the de-registration limit will be £83,000

Business Rates

Increases will be capped at £50 for businesses coming out of Small Business Rate Relief.  There will be a £300 million discretionary fund for local authorities to help businesses affected by rates revaluation.

National Minimum and Living Wage

Increases will apply from April 2017

Spring Budget 2017: Living and minimum wage rates UK
Changes to the National Living and Minimum Wage

Consumer protection

Something to be aware of – a new green paper will be published on protecting consumer rights. Changes will include new protections against unfair clauses, unexpected fees when subscriptions renew or free periods end, and steps to simplify terms and conditions.

Spring Budget 2017: Limited Companies

Dividend Allowance

The dividend allowance will be reduced from £5,000 to £2,000 per year from April 2018.  Costing from £225 for owner/directors of small limited companies.

Corporation tax

A little good news for limited companies will be the fall in corporation tax rate to 19% from April 2017, and to 17% in April 2020.

R&D Tax credits

The government will make administrative changes to the Research and Development Expenditure Credit, to increase the certainty and simplicity around claims. They have also promised to take action to improve awareness of R&D tax credits among SMEs.

Summary

The Spring Budget 2017 was the last time a budget will be held in spring.  From 2018 there will be a Spring Statement and the budget will be held in autumn.

In the short-term it could be beneficial for some self-employed people to incorporate their business. Traders would gain a little control over their remuneration, splitting between salary and dividend payments. However, the trend over the last couple of years has been for the government to try to reduce the difference in taxation between different business vehicles.  It could be just a matter of time before we see an increase in tax on dividends, or the introduction of an NI charge on dividend income.

The government budget documents provide further information.

If you’re concerned about how any of the changes in the Spring Budget 2017, please get in touch.

 

PSC Registers and Confirmation Statements

PSC registers and confirmation statements affect all UK Companies registered with Companies House.   They are new measures contained in the Small Business, Enterprise and Employment Act.

PSC Register

From 6th April 2016 every company must keep a register of People with Significant Control (PSC) over the company.  For many companies, such as owner managed businesses where the shareholder (owner) is also the sole director, this will be straightforward. All you need is a document titled ‘PSC Register’, with the following details of the PSC(s):

  • name
  • service address
  • date of birth
  • nationality
  • country or state of normal residence
  • residential address (not to be disclosed when making the register available for inspection, or providing copies)
  • the date the person became a PSC (or 6th April 2016 if earlier)
  • which conditions for being a PSC are met, and
  • whether an application has been made to keep the individual’s information private.

More information and details of the conditions for being a PSC are explained here.

If your company is more complex than an owner managed firm with only one or two director/shareholders, you may need more comprehensive guidance and/or to seek professional assistance.   Please note, this is draft guidance, and could be amended in the future.

Guidance is also available for People with Significant Control.

Companies will be required to maintain the PSC Register from 6th April 2016, and file it at Companies House from 30th June 2016.

Confirmation Statement

From 30th June 2016, the annual return is being replaced.  Instead, companies will file a ‘confirmation statement’ at least once a year.  For many companies making a confirmation statement will be very similar to filing the annual return.  The company information held at Companies House needs to be ‘checked and confirmed’, and any changes notified.

Your first confirmation statement date will be 12 months from your last annual return date.  You’ll have 14 days to file it (this is a reduction from 28 days for the annual return). For most companies, this will be the first time they notify Companies House of their people with significant control (PSC).

The requirement for companies to update their record with certain changes still exists. Changes to PSC details are to be updated on a confirmation statement, so companies can make a confirmation statement many times as necessary.  Whenever a confirmation statement is made, you don’t need to file another for 12 months (if nothing changes).

Other changes for companies – applied from October 2015

Accelerated strike-off

The time it takes for a company to be struck off the Companies Register has been reduced from 3 months to 2 months.

This means that your company could be struck off more quickly if you fail to keep records up to date. It also means you have less time to object to a strike off.

Directors’ dates of birth

Directors’ dates of birth are now suppressed on the public record. Directors still need to provide their full date of birth to Companies House, but it won’t be shown in full on the public record, new filings and images.  Please note that historic documents cannot be changed, so past information may still show the full date of birth.

Consent to act as a officer

For newly appointed officers, Companies house has added a statement to the relevant appointment and incorporation forms (paper and electronic) that the person has consented to act in their relevant capacity.

Companies are required to agree to this statement. This replaced the previous consent to act procedure of providing a signature on paper forms and personal authentication on electronic filings.

As part of this, Companies House will write to all newly appointed directors to make them aware that their appointment has been filed on the public register and explain their general legal duties.

Directors already holding office can refresh their knowledge of their responsibilities here: https://www.gov.uk/running-a-limited-company