Budget 2017 - what can we expect?
This year’s Budget announcement is right around the corner - so what might be in store for freelancers and small business owners?
More information about Making Tax Digital
The Chancellor could well use the Budget as a launch pad to give more information about the details of how Making Tax Digital will work for businesses. Will the minimum threshold for compliance be the originally proposed £10,000, for example? And what figures will actually be required for a quarterly submission under Making Tax Digital?
We also await with keen interest any announcements about how the government plans to help and support small businesses transition to Making Tax Digital, through the provision of information, funding or training for example.
The future of IR35
Changes to IR35, which will make public sector engagers (i.e organisations in the public sector that take on contractors) responsible for checking a contractor’s status and operating PAYE and NI for those contractors who are deemed to be quasi-employees, come into force on 6th April 2017.
What the entire contracting sector is keen to know, and what may be revealed in the Budget, is whether the changes will be extended to cover the private sector in the future. Even if the government is planning to do this, they may hold it back for a few years to see how the changes “bed in” in the public sector - so we may or may not see more about IR35 in this year’s Budget.
Business rates review
Small business rate relief has been kept at double the normal 50% rate for a number of years.
While this 100% relief is currently due to drop back to 50% on 31st March 2017, the Chancellor could use the Budget as an opportunity to keep the 100% relief for small businesses, either temporarily or permanently.
On the other hand, as business rates are about to be increased for certain businesses in many parts of the country, the 100% relief may be terminated in accordance with the existing plans.
Are freelancers in for another tough time?
With the changes to IR35 and the introduction of the new limited cost trader rate of 16.5% on the VAT flat rate scheme, freelancers have already felt the impact of recent legislative updates.
Will this Budget be used to introduce other measures that might affect freelancers, such as a restriction on what travel or food and drink costs may be used to reduce a small business’s tax bill? We can only hope not!
And finally a wish: more green tax reliefs!
If I could make one wish for what the Chancellor would include in the Budget - apart from radical tax simplification - then it would be for an increased level of environmentally-friendly tax reliefs for small business owners.
The flat rate allowance for the electricity and gas used by sole traders is a good start, because it saves sole traders some time in calculating their homeworking costs. Tax relief on bicycle business travel for sole traders, similar to that available for employees, would also be very welcome, and would also potentially encourage more sole traders to travel by bicycle.
Meanwhile, a simpler way of calculating how much sole traders can claim for other homeworking costs, such as rent, rates and council tax, would also save time and possibly encourage home working - which, in turn, could save on pollution caused by commuting!
- Pre-election Finance Bill adds to MTD uncertainty
- How MTD will work for businesses with an accounting year that doesn't match the tax year
- Important news for contractors - changes to IR35
- New tax year: what has changed?
- New VAT flat rate scheme rate for certain businesses