Impact of the UK Budget on small business round-up

The annual ritual of the UK Spring Budget took place in the House of Commons today and was delivered by Chancellor of the Exchequer Philip Hammond. Here are the measures that will be of interest to marketplace sellers and SMEs. Probably the biggest impact will be on the self-employed when it comes to National Insurance contributions but some other changes will be of interest.

National Insurance increases for the self-employed
Self-employed people will see considerable changes to their National Insurance contributions (NICs). As previously announced, Class 2 NICs, which are currently for the self-employed only, are being abolished in April 2018. Today the Chancellor revealed that class 4 NICs will be increased from 9% for the self-employed to 10% in April 2018 and 11% in April 2019. That could be a considerable increase for many self-employed people.

To reflect these increases, it’s worth remembering that the self-employed became eligible for the new single state pension from April 2016. And there will also be a consultation to see if the self-employed should also enjoy similar benefits to those who are employed with reference to parental leave.

Dividend tax allowance changes
For those working through a limited company, the chancellor announced a reduction in the dividend tax allowance from £5000 per year down to £2000 per year in 2018/19.

Making Tax Digital
Firms with turnover under the VAT threshold of £83,000 a year will be given an extra year to comply with Making Tax Digital to April 2019.

VAT thresholds
From 1st April 2017, the VAT registration threshold will increase from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000.