The Autumn Statement

Highlights

Corporation tax will fall to 17% by 2020.

The tax and national insurance advantages of salary sacrifice schemes will be removed from April 2017 except for arrangements relating to pensions, childcare, cycle to work scheme and ultra-low emission cars.  Arrangements in place before 5 April 2017 will be protected until April 2018.

Starting threshold for employee and employer National Insurance will be aligned, costing employers an additional £7.18 per employee per year.  No additional cost to the employee.

The personal allowance increase to £11,500 is confirmed from 2017.

The national min mum wage and the national living wage will increase.

A new savings bond with NS&I will be detailed in the next budget, providing investors with a 2.2% gross return on a three year bond.

The number of free childcare hours is to be increased from 2017.

No rise in fuel duty, but insurance premium tax will increase by 2% from 1 June 2017

Rural rate relief will increase to 100% from 1 April 2017, bringing it in line with small business rate relief.

Letting agency fees are to be borne solely by landlords.  Tenants will not bear any of the letting agency fees.

A response to the Masking Tax Digital consultation will be published in January 2017.

From Autumn 2017, the budget will be in the Autumn and the spring will see a Spring Statement.  We can look forward to two budgets in 2017.

Omitting low-cost expenses adds up to £239 million a year

According to a study from software provider ‘FreeAgent’, small businesses across the UK are losing out on a collective £239 million each year by failing to submit expense claims of less that £10.  Using a sample of 2.5 million expenses submitted by its customers, ‘FreeAgent’ found the average micro-business owner had around £216 worth of expenses with an individual value of less that £10.

Using the results of an earlier survey of web professionals where 22% said they didn’t think it was worth claiming anything costing £10 or less – the newer study projected across the UK’s estimated 5 million small business to reach it total.

Digital Tax Concerns

‘ICAEW’ carried out a recent survey in March 2016 in which it was discovered that a lot of firms in the UK are not ready for the changes to the tax system in which they will have to keep digital tax records by 2020.

A warning has been issued by the ‘ICAEW’ that a very large burden will be on businesses in 2020 as business owners will also be required to provide digital tax reports every quarter to ‘HM Revenue & Customs’ (HMRC).  From the Survey, 75% of respondents said they do not prepare their accounts using accounting software and 41% of construction and manufacturing firms rely on paper-based tax records.

Even though 55% of the firms supported the changes, only a very small 18% believe that they should be a statutory requirement.  Paul Aplin, Chairman of the ‘ICAEW’s technical committee said: ‘Businesses should be able to move to the new system over time when they are ready.  Government claims that these proposals will contribute to reducing business tax compliance costs by £400m, but we fear that many small businesses will in fact face additional costs when digital record keeping is made mandatory’.

Read more about the survey at http://bit.ly/1Th5iSM

British Accountancy Awards

No we didn’t win an award, but Xero did.  From a shortlist of 10, Xero won the award for Client Software Product of the Year.  This is the industry telling us that Xero is a great product for our clients to use.  It beat the likes of Sage and Quickbooks Online, as well as some widely used but lesser know products such as FinancialForce.com, Clearbooks and FreeAgent

We have been promoting Xero for 7 years now and it looks like we have backed a winner.  If you don’t already use Xero, have a look and see if it can help you manage your business more efficiently.