March 13, 2017
A chartered accountant has welcomed the Government’s decision to delay a vote on tax rises for self-employed workers until later this year.
Phil Bates, Principal at Cheshire and Wirral accountants Phillip Bates & Co, says the announcement made in last week’s Budget came as a shock to many of his clients who run small and medium sized businesses in the region.
Key announcements by Chancellor Philip Hammond affecting business owners and the self-employed included:
- The main rate of Class 4 National Insurance contributions to increase from 9% to 10% in April 2018 and 11% in April 2019;
- Reduction in the tax-free allowance on share dividends from £5,000 to £2,000;
- £435million set aside for businesses affected by the increase in Business Rates including £300million hardship fund for worst hit;
- Privately owned SMEs and landlords below the VAT threshold to get an extra year to prepare for Making Tax Digital and quarterly reporting.
Phil, whose office is in Neston, said: “Small business owners must feel like they are being hit from all sides at the moment. Before the Budget they were facing the prospect of increases in business rates and the looming requirement for them to digitise their businesses by filing tax returns online each quarter.
“Then, in this week’s Budget, they hear that the tax-free allowance on their share dividends is being reduced, while the self-employed will see their NI contributions rise.
“All of this at a time when we are just a couple of weeks away from Brexit being triggered and the continuing uncertainty over the future direction of the UK economy. It is made even more unsettling by the fact the Government has clearly reneged on its manifesto promise not to increase NI contributions.
“Business owners and the self-employed need the support of Government, not to feel as if they are being punished to help the Chancellor plug holes elsewhere in the public finances.
“I am pleased that the Government has announced that the proposed tax rises will not go before MPs until the Autumn and that Ministers will take the opportunity to talk more widely with those most likely to be affected.”
Phil also welcomed the latest concession on the implementation of the Making Tax Digital policy, which will force SMEs to use digital tools, such as software or apps, to keep records of their income and expenditure.
The announcement follows previous concessions at the end of January. These included allowing businesses to continue using spreadsheets to record receipts and expenditure, which they can link to software to automatically generate and send updates to HMRC.
The Government further announced that free software will be available to the smallest businesses and that businesses “that cannot go digital will not be required to do so”.
Phil added: “There remains a lot of ambiguity around the Making Tax Digital implementation. For example, they talk about businesses “that cannot go digital” being exempt, but what criteria will be applied to make this assessment?
“Ministers keep telling us that under the current system over £8billion a year is not collected due to avoidable taxpayer errors and carelessness, but it has never explained how it has arrived at this figure.
“We are also told that the average cost to businesses to make the transition will be £280 but this will only apply to the very smallest businesses. For others, the costs will be considerably greater.”
Any business wanting advice on changes announced in the Budget should contact Phillip Bates & Co on 0151 353 0003.
NOTES TO EDITORS
For an interview with Phil Bates or more information, please contact Nick Mason at Mason Media on 0151 239 5050 or email: firstname.lastname@example.org