Autumn Statement 2016
HMRC intend to introduce an online tool from April 2017, which will allow users to determine whether they are inside or outside the IR35 rules.
SJD Accountancy has been actively engaged with HMRC on these reforms and will, as a result, be helping to test and evaluate the latest version of the tool.
Given it is Government policy that there will be an online tool, SJD Accountancy is committed to be the voice of the contractor and provide HMRC with input and guidance to ensure that the online tool is as reliable as possible, and flexible enough to recognise different scenarios.
We will keep you updated, but in the meantime please contact Derek Kelly, CEO of SJD Accountancy, if you have any questions and wish to discuss this.
Key points from the Autumn Statement 2016
In the lead up to today’s Autumn Statement there has been continued speculation in the media regarding the changes that could affect contractors. We have reviewed what the Chancellor, Philip Hammond, presented in Parliament today and have summarised the key points below.
There are 3 key announcements pertinent to all contractors and freelancers which relate to people working in the Public Sector and the VAT Flat Rate Scheme.
- Following consultation, the government will reform the off-payroll working rules in the public sector from April 2017 by moving responsibility for operating them, and paying the correct tax, from the contractor themselves to the body paying the worker’s company. The public sector bodies will be responsible for the correct payment of tax. No definitive guidelines have as yet been published and we will keep you updated on any future announcements in relation to this.
- 5% tax free allowance will be removed for those working in the public sector reflecting the fact that workers no longer bear the administrative burden of deciding whether IR35 rules apply.
- Flat Rate Scheme (FRS): A new rate of 16.5% will be applied from 1 April 2017 for businesses with limited costs (for example labour only businesses). Draft legislation will be published on 5 December 2016 including a handy calculation tool to help contractors assess if the 16.5% rate applies.
Additional points to note:
Taxation of benefits in kind
Tax and employer NI advantage of salary sacrifice schemes will be removed from April 2017 except for arrangements relating to pensions, childcare, Cycle to Work and ultra-low emissions cars. Arrangements in place before April 2017 will remain in place until April 2018. Arrangements for cars, accommodation and school fees will be protected until April 2021.
Any cash contribution ‘making good’ payments to reduce the value of a benefit must be made by 6 July following the end of the tax year. Provisions are to be made in Finance Act 2017 to only tax personal use of business assets for the periods that they are made available.
Property and trading income
A new £1,000 tax allowance is available. If your income is below £1,000, the income is not reported or taxable.
Low emission cars
100% First Year Allowance (FYA) is applicable for expenditure on electric charge point equipment. The allowances expire on 31 March 2019 (in relation to Corporation Tax) or 5 April 2019 (in relation to Income Tax).
New tax bands and rates for Ultra Low Emission Vehicles have been announced. The rate for cars emitting more than 90g CO2/km has been raised by 1%.
Only 50% of profits can now be used to offset brought forward losses.
Personal Allowance increases to £11,500 for all contractors from 6 April 2017 – this will not affect Scottish tax payers. The higher rate threshold will increase to £45,000 from the same date. Income tax rates and dividend tax rates are unchanged.
Employers and employees will now both start paying National Insurance Contributions (NIC) when income exceeds £157 per week from April 2017.
Duty on fuel remains frozen for the seventh consecutive year.
A ban on letting agents charging fees to tenants is to be imposed as soon as possible (the date is yet to be announced). This is already in place in Scotland.
The total maximum amount of savings that can be paid into an ISA will be increased from £15,240 to £20,000 in April 2017.
This was Philip Hammond’s first, and last Autumn Statement. Following the Spring 2017 Budget, the timetable for Budget announcements will change. The Budget will take place in the Autumn of each year. This will be followed by a Spring statement which is not intended to introduce major legislative changes.
As ever, the Autumn Statement contains many legislative and regulatory changes which will impact you. We are sure, once you have had time to digest this information you will have some questions. If you would like to discuss anything in more detail, we will be happy to assist and advise you further. Please do not hesitate to contact your accountant.
Download your comprehensive report on the Autumn Statement here:
For further advice please call our New business team on 01442 275789 or email firstname.lastname@example.org.