March 2017 Budget Seminar

Axminster · Barnstaple · Bideford · Bridgwater · Burnhan on Sea · Crediton · Exeter · Holsworthy · Honiton · Ilfracombe
· Langport · Okehampton · Plymouth · Seaton · Somerton · Tiverton · Torquay · Weston super Mare

By Your Side. On Your Sidewww.thomaswestcott.co.uk
Corporate and Business tax – Mark Tibbert
Making Tax Digital – Dale Simpson
National Insurance, Dividends and Domicile – Michael Marsh

Mark Tibbert
Corporate & Business Tax

 Company Tax Rates
 Research & Development
 Business rates
 VAT
 Other changes
Overview

2016 2017 2018 2019 2020
20% 19% 19% 19% 17%
Overview

Research & Development
 Considered to be the most competitive in the world
 Review of the administration to simplify claims and give greater
certainty
 What are the current reliefs?

Research & Development (cont.)
 Since 1 April 2015 for SMEs
 Uplift of 230% of qualifying costs
 Can surrender for a 14.5% tax credit if losses
 If a first time claimant you have the ability to get assurance
from HMRC
 Large companies 130% relief or above the line tax credit from
1 April 2016 at 10%
 > 500 employees; and
 > €100m turnover; or
 > €86m total assets.

What is R&D?
 Cover diverse range of activities
 In essence seeking to achieve “an appreciable
improvement to an existing process, material, device,
product or service.”

What qualifies?
 Costs directly and indirectly linked to qualifying activities
 Staffing costs
 Consumable costs
 Watch prototypes that are subsequently sold
 Certain utility costs
 Subcontracted costs (65%)

Business Rates
New reliefs from April 2017 (England):
 Business losing Small Business Rate Relief limit increase in
bills to the greater of £600 or the real terms transitional
relief cap each year
 Public Houses to benefit from a £1,000 business rates
discount with rateable value < £100,000
 Watch multiple properties.
 Local Authorities to have a discretionary £300m fund to
provide relief.
Review for more frequent valuations (every 3 years)

 Registration limit increased to £85k (currently £83k)
 New Flat Rate Scheme rate of 16.5%
 Applies from 1 April 2017
 Applicable to ‘low cost traders’ i.e. labour only
businesses
 New online tool to check whether it applies to be
launched by HMRC
VAT

 SDLT – delay in shortened filing deadlines until 2018 - 2019
 Transfer of assets to trading stock:
 Currently treated as no gain / loss for tax
 From 8 March 2017 only treated as no gain for tax
 Stopping conversion of a capital loss to a trading loss
Other changes of interest

Dale Simpson
Making Tax Digital

M.T.D
 No – it’s not Match of the Day!
 HM Revenue and Customs’ initiative for Making Tax Digital
 Overall tax gap for £35bn
 £5.5bn failure to take reasonable care £3.2bn error
 Introduction of MTD anticipates reducing the tax gap by 10%

M.T.D
 Many self-employed businesses, partnerships and landlords
keep manual records
 HM Revenue and Customs’ perception is that these are
inadequate and lead to errors
 From April 2018 must keep records on HM Revenue and
Customs’ approved software
 Quarterly reporting to HM Revenue and Customs one month
after quarter end

M.T.D
 Start of making the UK have the most digitally advanced tax
system worldwide
 Individual taxpayers with prepopulated digital accounts
 VAT registered traders from 2019
 Limited companies and partnerships with turnover of £10m+
from 2020

M.T.D
 MTD compliant software not written by HM Revenue and
Customs
 Nudges and prompts built into software
 Excel spreadsheet records will need to link into approved
software
 Simplification of the tax system to help make MTD practical
 Extended availability of the cash basis

M.T.D
 Gradual removal of the need to complete tax returns
 Voluntary Pay As You Go
 All tax in one place
 Harsher penalties for defaults
 “Soft landing” in year one

M.T.D
 Discussed in 2016 through consultations, responses and
replies to consultation responses
 MTD has been subject to criticism – speed of timetable; cost to
businesses; need for quarterly returns; House of Lords
 So what’s new now?

M.T.D
Type of
business
Year end Turnover MTD start date
Sole Trade or
Partnership
31 March Any April 2019
Landlord 5 April < £85,000
> £85,000
April 2019
April 2018
Sole Trader or
Partnership
6 April or later < £85,000
> £85,000
April 2019
April 2018
Partnership Irrespective > £10,000,000 April 2020

M.T.D
 Draft Finance Bill contains primary legislation for MTD
 Many key details delegated to secondary legislation which will
receive little Parliamentary scrutiny (directions and notices)
 Gives extremely wide powers to HM Revenue and Customs
 Be prepared!

M.T.D
 What are TW doing to assist their clients?
 Choosing and implementing suitable packages for clients
 Pick and mix service levels to suit client needs
 Keeping clients up to date with HM Revenue and Customs’
developments
 Series of seminars for clients, prospective clients and
professional colleagues in the Spring

Michael Marsh
National Insurance, Dividends and
Domicile

Employees
Self-employed
Company
owner/managers

NICs
 Class 1 NICs paid by employers/employees
 Employers 13.8%
 Employees
- To UEL 12.0%
- Above UEL 2.0%
 Class 2/Class 4 NICs paid by self-employed
 Class 2 £2.85PW
 Class 4
- To UAP 9.0%
- Above UAP 2.0%

NICs changes
 Class 2 NICs abolished from 6 April 2018
 Class 4 NICs rate to UAP:
 10% from April 2018
 11% from April 2019
 No change to 2% rate

Impact of Changes
Profits Additional NICs
20,000 88
30,000 289
40,000 489
50,000+ 588

Dividend ‘Allowance’
 Introduced 6 April 2017
 £5,000 PA
 Rate band, not allowance

Dividend Allowance
 Reduced to £2,000 from 6 April 2018
 Annual impact:
BR taxpayer – £225
HR taxpayer – £975
AR taxpayer – £1,143

Net Impact on Incorporation
Profit Current benefit Benefit before
2018
20,000 500 363
40,000 800 1,064
50,000 1,100 713
75,000 1,660 1,273
100,000 660 273
150,000 <348> <903>
+ Flexibility!

Domicile
 Deemed domiciled if UK resident for 15 out of 20 years
 Anyone born in the UK within a UK domicile of origin will be UK
domiciled for all UK tax purposes while UK resident
 IHT charged on all UK property beneficially owned by a non-
domiciled taxpayer, even if indirectly held

Domicile
BUT
 Exemption for non-UK resident trusts
 CGT rebasing opportunity for non-UK assets
 Segregation of mixed funds

THANK
YOU

March 2017 Budget Seminar

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