Autumn Budget 2017: business as usual for small business clients

Brought to you by FreeAgent

Emily Coltman FCA, chief accountant to award-winning online accounting software FreeAgent, summarises the key changes announced in today’s Autumn Budget that will affect your small business clients.

The biggest change that the Autumn Budget 2017 presented for small business owners was simply that a Budget happened in the autumn as well as the spring! There was remarkably little in today’s announcement (or the accompanying full Budget report) for clients who are freelancers, contractors or other small business owners - but here is what we did learn.

No change to the VAT registration threshold for two years

Since the Office of Tax Simplification published its report on VAT earlier this month, various rumours have been circulating about whether the Chancellor would change the threshold for VAT registration in the Autumn Budget. In the event, he opted to freeze the VAT registration threshold at its current level of £85,000 for two more years from April 2018. In real terms, this could be considered a reduction, since usually the threshold rises every year.

Potential reduction in rates

Clients who run their businesses from rateable premises will find their rates rising by the lower Consumer Prices Index as opposed to the Retail Prices Index. And if they were affected by the so-called “staircase tax”, which meant that businesses using office spaces separated by communal stairs, lifts or hallways were charged higher rates, they will be able to apply to have that rate assessment lowered.

Making Tax Digital (MTD) plans unchanged

The Chancellor didn’t mention MTD at all in his announcement and, digging deeper into the full Budget report, it’s apparent that the plans for rolling out the initiative haven’t changed. MTD will not become compulsory until April 2019 and then only for VAT and for businesses with annual sales over the VAT threshold.

Diesel tax increases to affect cars only

From April 2018, any new diesel cars that do not meet the “clean diesel” criteria will be subject to increased car tax. This will apply only to cars, not to vans, so clients who own and use a van in their business will not have to pay additional tax on it.

Corporation Tax indexation allowance frozen

January 2018 will see the freezing of the Corporation Tax indexation allowance for chargeable gains made by companies. It remains to be seen whether this will be replaced by a taper relief similar to that available for individuals.

Anti-avoidance and the Employment Allowance

The budget report claims that the government has “found evidence” that employers are claiming the Employment Allowance when they are not entitled to do so, “often by using offshore arrangements”. From 2018, HMRC will “require upfront security” from employers who have used the Employment Allowance in this way to avoid paying National Insurance in the past.

In summary, while there were a few points of interest for small business owners, this Budget can be described very simply as “business as usual, no major changes”.

To find out more about FreeAgent, visit their website or call 0800 025 3900.