November 2017 Budget

November 2017 Budget: A breakdown for small business.

The Chancellor just gave the budget for November 2017, the headlines will focus on BREXIT and stamp duty changes for first time buyers, however at Woods Russell we have picked below the surface to see how the budget will affect our small business clients.

At Woods Russell we believe that support for small business should be a priority of any budget and it was good to see that threatened changes that may have adversely impacted small business, such as the reduction in the VAT threshold, were put on hold.

Overall there was nothing too scary to come out of the budget for small business and there was no attack on the ‘white van man’ as in the last budget. The most negative item was the freeze on indexation allowance for companies, although this is unlikely to affect many small businesses it will have an impact on residential property landlords when deciding whether to move property into a company and could have a big impact on long term investment decisions.

In our summation of the key topics to come out of the budget, the main ones that will affect small businesses are:

Residential property landlords and companies

·         Freezing of the indexation allowance for capital gains made by corporates could be a big deal in the future, it will essentially mean no capital gain allowance in companies for capital charge assets from January 2018. This could make the idea of keeping your property empire in a company much less attractive in the long term as there will be no allowance for the increase in value.

·         For property landlords the introduction of the 30 day payment window for capital gains has been deferred until 2020.

·         The R&D tax credit has been increased from 11-12% which should give an extra boost to those small companies engaged in research and development.

 

Small businesses in general

·         VAT thresholds were left unchanged at £85k. This is good news for many small businesses, especially those who deal with the general public who suffer VAT.

·         A consultation was announced on IR35 rules for private sector with a view to bringing them in line with the public sector. This would have a major impact for many contractor businesses as it would move the onus of compliance from the sub-contractor to the main contractor.

·         There will be no benefit in kind for employers who let their employees charge their electrical cars at work. This will probably only effect a very small number of small businesses but it removes a headache for those that do have electric cars.

·         Measures were also announced to help with business rates including pegging rates to CPI rather than RPI.

 

General tax changes to note

·         The personal allowance will increase to £11,850 from April 2018 and the higher rate threshold to £46,350.

·         National living wage to rise to £7.83 per hour from April 2018.

 

Matthew Russell