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Budget 2017 -Key points affecting unincorporated businesses

Making tax digital for sole traders, partnerships  and landlords

Unincorporated businesses (businesses owned privately by one or more people) that have an annual turnover below the VAT registration threshold (currently £83,000) will have until April 2019 to prepare before MTD becomes mandatory.

Under MTD, businesses will use digital software to keep tax records and update HMRC quarterly.

Changes to National Insurance rates (NICs) for the self-employed

Benefits

Although no changes have been announced, the government has committed to considering whether there is a case for greater consistency in parental benefits between the employed and self-employed.

Tax free allowances and higher rate band

From 6 April 2017 the Income Tax personal allowance will increase to £11,500.

The government has committed to raising the Income Tax personal allowance to £12,500, and the higher rate tax threshold to £50,000, by 2020.

From 6 April 2017, the higher rate tax threshold will rise to £45,000, except in Scotland where it will remain at £43,000 (savings and pension income will however still be subject to the £45,000 threshold).  The 0% starting rate band for savings income will also remain at £5,000.

 

Lothian Accounting will be  looking at the benefits of operating as a limited company as opposed to an unincorporated business (sole trader or partnership) as a result of the changes to both the self-employed and company tax environment.

If you would like to talk more in more depth about the 2017 Budget and how it might affect you  please call or drop me an email.

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