Chartered Accountant, Patricia Arnold, reflects on the last spring budget (sponsored content)

As with all budgets, the devil is in the detail. However, the most significant item to note is that the dreaded subject of digital returns of income is clearly with us.

The sole concession being that it will only be individuals with a total income from self-employment and property combined in excess of the VAT threshold (£85,000 for 2017-18) but who aren’t VAT registered.

They will be obliged to start reporting their income and expenditure on a quarterly basis from the beginning of the 2018 tax year.

All other businesses and property businesses, as per the original suggestion, with turnover in excess of £10,000 will be obliged to do the same from the beginning of the 2019 tax year.

This is going to be a significant change and a substantial cost to many businesses who don’t currently use a bespoke accounting package.

As if this wasn’t enough for small businesses to contend with, the Chancellor has chosen to bring in changes that will affect the tax position of people running their own businesses - the reduction in the zero band for dividend taxation which will affect people trading as limited companies.

This relief currently stands at £5,000 in the 2016-17 tax year but from the beginning of the 2018 tax year will fall to £2,000.

It was also proposed that those trading in a self-employed capacity would find their National Insurance rising from the current rate of 9% to 10% for the 2018-19 tax year, followed by an increase to 11% for the 2019-2020 tax year. However, following mounting pressure, the Chancellor announced a u-turn on this.

The tenor of tax changes in this area over the last couple of years, with the considerable reform of dividend taxation last year and major changes to the flat rate VAT scheme effective from 5 April 2017, constitute a significant attack on the small business which is always considered to be the powerhouse of the UK economy.

<b>To find out how we will make your business our business please call Patricia J Arnold & Co Ltd Chartered Accountants on 01434 606624.</b>