This week, there were two B words on everyone’s lips – ‘Budget’ and ‘Brexit’. Both have major implications, yet the immediate concern of Chancellor Phillip Hammond was to outline a financial plan based on what we know, not what may happen in Brexit talks.
Some of the changes will mean an awful lot to thousands of self-employed people in the UK, including freelancers and contractors. Care to see what’s different? Bright Ideas have done the hard work for you – here are our prime takeaways from the Autumn Budget 2017.
No rollout of IR35 for the private sector
Many contractors were awaiting Hammond’s turn at the podium with a twinge of fear. Would the changes to IR35 – whereby the job of confirming this status in the public sector rests with the client, instead of the worker – extend further into the private sphere?
However, it looks like you’re in the clear for now, as nothing concrete was said about IR35. We can assume that a wider rollout has been shelved until 2019 or later. The Chancellor promised a consultation on “off-payroll working” that’s due for 2018, so perhaps this will be more indicative of where the government’s falling on the issue.
VAT threshold frozen
Ministers keep touting our country as a leading example of business-friendly tax policies. One of them, surely, is how high our VAT threshold is set at – currently £85,000, which is going to be frozen until 2019.
On the surface it may appear to be good news. Dig deeper, though, and this might ultimately mean that more people cross the VAT threshold. That’s because inflation is going to rise whilst the collection limit stays the same. Freelancers and contractors will have to be extra mindful of reaching this target in the next two years, in case they’re landed with sudden VAT obligations.
It also means that more businesses are going to be using Making Tax Digital at the earliest opportunity (April 2019), when it becomes mandatory in that period for any VAT-registered earnings.
Increase to the personal allowance
The last prime point of interest lies in our personal allowance i.e. the threshold above which you have to pay tax on earnings. By April 2018, it’ll rise from £11,500 to £11,850 per annum, stepping in-line with inflation forecasts.
Anyone in the basic rate will save roughly £60 on every Self Assessment tax return. Higher rate tax payers stand to benefit too, thanks to a jump from £45,000 to £46,350; earning more than this will qualify for the 40% income tax charge (or 32.5% on dividends).
So, at a glance, the Budget hasn’t broken any huge policies out of the gate. IR35 remains as it is, for the moment. VAT is being kept behind inflation, whilst our personal tax allowances are preceding it. An accounting expert like Bright Ideas can ensure you’re making the most from these adjustments, however small they may be.
Call us on 0161 669 4221 or email info@biaccountancy.com if you want to upgrade your financial acuity going forward.
