The Chancellor of Exchequer presented his 2018 budget on Monday. In today’s article we have chosen and summarised the key points for small businesses.
From April 2019 the personal allowance threshold, the tax free allowance for individuals will rise from £11,850 to £12,500. One year earlier than originally planned.
Importantly, this £650 increase will mean a typical basic rate tax payer will pay £130 less tax in the year 2018-19.
At the same date the higher rate income tax threshold, the point at which individuals pay tax at 40% will rise from £46,350 to £50,000.
This will mean that there will be 1 million fewer higher rate taxpayers than in 2015 -2016.
Finally, the National Living Wage (minimum wage) will rise from £7.83 to £8.21 an hour from April 2019.
CONTRACTORS AND IR35
To align with the public sector the responsibility of operating ‘off-payroll’ working rules will move from the individual to the organisation. This will be introduced by April 2020.
Contractors will need to review their tax situation before April 2020. Get in touch today for a full review.
Cuts in business rates bills by one third for retails properties with a rate able value of £51,000 from April 2019.
A win for small businesses who are struggling with ever growing overheads on the high street.
Letting relief will be reformed so that it only applies in circumstances where the property is in shared occupancy with the tenant.
Also, the final period exemption will be reduced from 18 months to 9 months.
Importantly, these are reductions in tax relief for landlords when they sell properties.
Small businesses will still be eligible for the employment allowance. However, from April 2020 the government will restrict access to employers with employer national insurance contributions bill below £100,000 in their previous year.
Importantly for small businesses this means a continuation of a tax relief of a maximum of £3,000.
Annual Investment Allowance will increase to £1 million for qualifying investment on or after 1 January 2019. Such a huge increase in the AIA is designed to encourage businesses to invest in plant and machinery.
To support longer term business investments, the minimum period of ownership for qualifying for entrepreneur’s relief will increase from 12 months to 24 from April 2019.