Today’s Spring Budget Announced by Philip Hammond is bad news for small business owners. Already, in the Autumn statement, it was announced that not only will VAT-registered businesses who operate under the Flat Rate Scheme be subjected to additional conditions to identify whether they are ‘Limited Cost Traders’ (upon which their VAT rate will increase to 16.5% making it hardly worthwhile being in the scheme which was originally designed to make VAT simply for small businesses); and also every business & landlord with income in excess of £10,000 will need to submit quarterly returns as part of the Making Tax Digital Scheme, but now in the Spring Statement the news is:

  1. Sole-traders will have to pay a higher rate of Class 4 National Insurance (currently 9%) which will be 10% from April 18 and 11% from April 19
  2. The Tax-free Dividend Allowance will reduce from £5,000 down to just £2,000 – making it even less tax efficient for businesses to form Limited Companies
  3. Each individuals’ tax free allowance will increase by £500 to £11,500 from April 17

 

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It is more important than ever now to consider your business structure. For guidance on the best structure for you, contact LeeP Financial Accountants on 01733 699033 or email polly@leepfinancial.com