Welcome to the October 2017 Newsletter from Beatons Group
Chancellor Philip Hammond has confirmed that his first Autumn Budget will be delivered on Wednesday 22 November 2017, under the government's new fiscal timetable. The Autumn Budget will outline the government's plans for the 2018/19 tax year, based on the latest forecasts from the Office for Budget Responsibility.
Meanwhile, the government has published Finance Bill 2017-19, reintroducing a range of legislative measures which were put on hold pending the snap General Election. Among these is the reduction in the Dividend Allowance, which will fall from £5,000 to £2,000 in April 2018.
Finally, the Federation of Small Businesses has called for urgent action on the so-called 'staircase tax', which has resulted in many small businesses receiving backdated business rates bills.
Finance Bill confirms Dividend Allowance reduction
The publication of Finance Bill 2017-19 ushers back in a raft of measures that had previously been dropped from Finance Bill 2017.
One such measure is the forthcoming reduction in the Dividend Allowance, which is set to fall from £5,000 to £2,000 next April. With 2.7 million individuals in receipt of dividend income, many are likely to feel the effects of the change.
Chancellor Philip Hammond stated that the cut would help to 'address the unfairness' that may be associated with the tax advantage enjoyed by director-shareholders.
The Chancellor initially announced the plans in the 2017 Spring Budget, but the measure was dropped from Finance Bill 2017 to pave the way for the General Election.
The reduction is likely to affect director-shareholders who opt to take dividends on top of a salary. It may also have consequences for savers with investments in stocks and shares worth £50,000 or more outside of an Individual Savings Account (ISA). According to HM Treasury, the average loss is expected to be around £315 - but it could be significantly more for individuals paying tax at the higher or additional rate.
Other measures reintroduced to Finance Bill 2017-19 include the planned reduction in the pensions Money Purchase Annual Allowance (MPAA), which has fallen from £10,000 to £4,000. The measure is being enforced retrospectively, and has been backdated to the beginning of the 2017/18 tax year.
The Finance Bill also outlines a framework for VAT reporting, under the government's new Making Tax Digital initiative.
Backdated 'staircase tax' bills branded unfair to small firms
The Head of the Treasury Select Committee, Nicky Morgan, has branded the sending of backdated business rates bills to small businesses in England and Wales as 'particularly unfair'.
Dubbed the 'staircase tax', businesses which occupy space on multiple floors of a communal commercial property now receive separate business rates bills for each floor they occupy, where the areas separating the offices are communal (for example lifts, corridors and stairs). Some firms in England and Wales have seen their business rates rise significantly as a result.
The Valuation Office Agency (VOA) determines business rates for firms in England and Wales, and made the changes as a result of a previous Supreme Court ruling which considered how different storeys under common occupation in the same block are assessed for business rates purposes.
Business rates are calculated separately in Scotland, using the rateable value which is set by a local assessor, and the 'poundage rate' which is set by the Scottish government. For 2017/18, a Large Business Supplement of 2.6p is being added to all business properties with a rateable value of £51,000 or more.
Commenting on the so-called staircase tax, Ms Morgan said: 'It seems unfair to tax businesses differently depending solely on whether the staircases between their rooms are communal or private.
'It seems particularly unfair for the increase in rates to be backdated.'
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: 'No small business should receive a sudden tax hike of 5,000% simply because a workplace has been separated, for years, by a communal area, stairway or lift.
'Some small business owners are discussing whether to knock holes in their walls or stick a staircase on the outside of their premises.
'This is no way to run a tax system in the 20th century, let alone the 21st. Ministers have the power to provide relief, and they should do this urgently - to correct this defect in the UK tax system.'
ESSENTIAL TAX DATES FOR OCTOBER
Due date for payment of corporation tax for period ended 31 December 2016.
Deadline for notifying HMRC of new sources of taxable income or gains or liability to the High Income Child Benefit Charge for 2016/17 if no tax return has been issued.
Due date for income tax for the CT61 quarter to 30 September 2017.
Tax and NICs due under a 2016/17 PAYE Settlement Agreement.
PAYE, Student loan and CIS deductions are due for the month to 5 October 2017.
PAYE quarterly payments are due for small employers for the pay periods 6 July 2017 to 5 October 2017.
Deadline for submitting 'paper' 2016/17 self assessment returns.
Deadline for submission of 2016/17 self assessment returns if you require HMRC to compute your tax liability and/or if tax underpaid is to be collected by adjustment to your 2018/19 PAYE code.
QUOTE OF THE MONTH
'Small firms will be looking to the Chancellor to extend a lifeline at the Budget. In such a difficult trading environment, any new tax grabs or loss of relief for entrepreneurs would exacerbate existing challenges.'
Following the news that small business confidence has fallen, Mike Cherry, National Chairman of the Federation of Small Businesses, comments on small firms' Budget priorities.
WEBSITE OF THE MONTH
Key HR information for employers.
ON OUR WEBSITE
A wealth of resources for businesses
With topics ranging from capital allowances to the National Minimum Wage, the Your Business section of our site is a hub of essential information.
Useful information for individuals
For a comprehensive bank of guides covering self assessment, making a Will and much more, please visit the Your Money area of our website.
The latest hot topics from the world of business and tax
Why not take a look at the Hot Topics section of our website? Here we feature information on the latest topical business and tax issues.