Small Business Taxation targeted in Budget Autumn Statement

No primary category set

There’s already been plenty written in the daily newspapers about the Chancellors Autumn Statement and how it’ll affect families and individuals, but hidden away in the small print are some measures which will impact small businesses.

The Chancellor is following on from his predecessor and aims to tighten the screws on small businesses. This may be considered fair as there are some loopholes such as setting up a one person company to lower your tax bill, but this could impact you so read on. Here are the main points that could affect how much small online retailers earn:

Minimum Wage

The National Minimum Wage will rise:

  • for over 25 year olds – from £7.29 per hour to £7.50
  • for 21 to 24 year olds – from £6.95 per hour to £7.05
  • for 18 to 20 year olds – from £5.55 per hour to £5.60
  • for 16 to 17 year olds – from £4.00 per hour to £4.05
  • for apprentices – from £3.40 per hour to £3.50

A full time worker aged 25 or over will earn £1400 a year more, so small business wage bills will rise if they only pay the absolute minimum to their staff.

National insurance

From April 2017 employee and employer NI thresholds will be aligned at £157 per week which will cost employers around £7.18 extra per employee.

Income Tax

The tax-free allowance will rise from £11,000 to £11,500 in April 2017 and rise to £12,500 by 2020 at which time future rises willl be tied to inflation.

The point at which you pay the higher rate of income tax will increase from £43,000 this year, to £45,000 in 2017-18 and the aim to eventually rise to £50,000.

Corporation Tax

The main rate of corporation tax is down from 28% in 2010 to 20%, and will be cut again to 17% by 2020.

Salary sacrifice schemes tax increases

From April 2017, most salary sacrifice schemes will be subject to the same tax as income. Benefits in lieu of salary such as mobile phones and medical insurance will no longer be as attractive.

  • Pensions, pensions advice, childcare, Cycle to Work and ultra-low emission cars will be exempt
  • All arrangements in place before April 2017 will be protected for up to a year, and arrangements in place before April 2017 for cars, accommodation and school fees will be protected for up to 4 years

Single Person Companies

There has been a huge growth in single person companies and the Chancellor hasn’t failed to notice that you pay less tax. In particular retail (especially online), media and construction industries are likely to be affected as tax breaks are narrowed.

Flat Rate VAT

Flat Rate VAT was introduced to make accounting simple for small businesses but some are using it as a way to cut their VAT bill. Watch for a new 16.5% Flat Rate from the 1st of April 2017. This is likely to apply to businesses with limited costs so is likely to apply to all those such as ecommerce consultants who use the Flat Rate VAT scheme.

£1 billion fibre broadband and 5G networks investment

Investment will support the private sector to roll out more full-fibre broadband by 2020-21. Funding will also support trials of 5G mobile communications. From April 2017, the government will also provide a new 100% business rates relief for new full-fibre infrastructure for a 5 year period.

Small businesses are often less concerned about the speed of broadband and couldn’t care less about 5G, those in rural areas simply want to be able to get broadband in the first place or to find that their mobile has a basic signal. Many areas of the country still can’t even get 2G data signals.

15 Responses

  1. They’ve got to pay for the Corporation Tax cut to 17% by 2020 somehow, haven’t they?

    Much easier to take it off small businesses, who can’t fight it, unlike corporations with big lawyers.

    Under Dave we were all in it “together”

    Under May we are all in the sh*t together, unless of course, you happen to be rich

  2. When you cut to it this is the Tories asking small business to pay for multi-national tax cuts, most who do not pay a bean anyway = Amazon and eBay two of them.
    They are totally out of touch the Politicians anyway, not just the Tories but the lot of them.
    We have gone out there and created OUR own employment instead of being stuck in the dead end jobs they help produce. Instead of encouraging small British Business to grow and employ they would rather help out the Sports Direct’s of country, create more dead end job, which everyone hates, so productivity fall’s again.
    I would like to “Outsource” every last one of the Political career class , they are useless and have done nothing but suck of the public purse their whole life’s. They have 0 clue about the real world.

  3. How does a over 25 worker earn an extra 1400 pounds a year. It’s only a 21p per hour increase

  4. Music Magpie use a special vat scheme where they only pay vat on their net profit. Will they have to pay more under these new vat changes?

  5. Music Magpie use the Marginal VAT scheme – this is available to anyone who trades in used products. It was originally designed for fine art purchases from estates, as the values can be really big – but from what I understand it’s across all industries now including mobile phones and even automobiles. I don’t think the changes to flat rate VAT will have any effect on this scheme.

RELATED POSTS..

UK Plastic Packaging Tax rate increase from 1st April

UK Plastic Packaging Tax rate increase from 1st April

Referral Fee Changes Amazon Base Reserve policy impacts cashflow Amazon Disbursements held & VAT Liability email

Amazon Disbursements held & VAT Liability email

National Insurance cut to impact January pay cheques

National Insurance cut to impact January pay cheques

2024 US Tax Policy Predictions with Scott Peterson, Avalara

2024 US Tax Policy Predictions with Scott Peterson, Avalara

Jersey GST applied to ecommerce from 1st July

Amazon notify sellers of Jersey GST

ChannelX Guide...

Featured in this article from the ChannelX Guide – companies that can help you grow and manage your business.

Latest

Take a look through a selection of the latest articles on ChannelX

Register for Newsletter

Receive 5 newsletters per week

Gain access to all research

Be notified of upcoming events and webinars