Following his last Budget, the Chancellor had his work cut out if he wanted to please the contractors, the self-employed and small businesses. So how did he get on?
One of the areas which was speculated on in the run up to the Budget was IR35 and whether the rules brought in for the public sector might be extended to the private sector. However, there was no mention of IR35 in the Budget speech.
A consultation is due to take place next year, at this stage no news on IR35 is probably good news for contractors.
Personal Tax Allowance
It was no surprise that the Chancellor announced a rise to the personal tax allowance, the Conservative manifesto included a pledge to increase the personal allowance to £12,500 by 2020-21 so some increase was certainly expected.
From 6th April 2018 this will increase from £11,500 to £11,850 and the higher rate threshold will increase from £45,000 to £46,350. (The threshold in Scotland is different, and is currently £43,000).
The Chancellor confirmed that the rate at which businesses will need to register for VAT will remain at £85,000. Many will be relieved that this threshold hasn’t been reduced.
Cars and fuel
Fuel duty has been frozen which is good news for drivers and many businesses. For those who drive company cars there were changes for drivers of diesel cars and electric cars. The diesel supplement on tax for company cars is rising by 1%. From 2018 there will be no benefit in kind charge on electricity that employers provide to charge electric cars.
Tax on expenses
There will be a consultation on extending the scope of tax relief currently available for work-related training costs for employees and the self-employed.
Research and Development
The Chancellor announced an investment of £2.3 billion in research and development which will enable R&D tax credits to increase from 11% to 12%.
National Living Wage
There was some good news for lower paid workers as the National Living Wage will rise by 4.4 per cent from £7.50 an hour to £7.83.
This Budget didn’t really hold any surprises for contractors, the self-employed or small businesses. There was some good news for those considering buying their first home and the announcement on stamp duty for first time buyers was undoubtedly the most talked about of the speech. In other areas there was very little to report. There were no changes to corporation tax (which will remain at 19% as planned), NI or the annual dividend allowance which we already knew was due to be reduced from £5000 to £2000 from April 2018. Everyone will have their opinion on the Budget but despite a great deal of speculation ahead of the speech and the Chancellor talking for an hour the Autumn Budget didn’t include too many significant changes.
If you have any questions about the how any aspect of the Budget might affect you then please get in touch.