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20th April 2017

Spring Budget 2017

The main rate of self-employed National Insurance contributions (NICs) will increase

Currently, the self-employed may have to pay both Class 4 and Class 2 NICs. Class 4 NICs at 9% are paid on profits between £8,060 and £43,000 Class 2 NICs are paid on profits of £5,965 or more. From 2018, Class 2 NICs will be abolished. Class 4 NICs will rise to 10% in April 2018 and to 11% in April 2019. Taken together, only a self-employed person with profits over £16,250 will have to pay more as a result of these changes.

Tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018

This will reduce the tax difference between the self-employed and those working through a company.

Self Assessment Tax Return 2017

Here, we list the key deadlines to bear in mind so you can ensure your 2016-17 tax return is submitted on time. There are two ways to submit your tax return. You can either send a paper tax return to HMRC or fill in an online tax return.

  • Paper tax returns need to be filed by 31 October. So for tax returns relating to the year April 2016 to April 2017, for example, all paper returns should be submitted by 31 October 2017.
  • The deadline for filing online is three months later – 31 January. So tax returns for the year April 2016 to April 2017 can be filed online up to 31 January 2018.

Our advice: do not leave it to last minute in January!

2nd April 2017

April 2017 changes to Flat Rate VAT Scheme

From April 2017, there will be changes affecting businesses with a very low-cost basis. These businesses will now be classed as “limited cost traders” if they spend:

  • less than 2 % of their VAT inclusive turnover on goods in an accounting period; or
  • more than 2% of their VAT inclusive turnover but less than £1000 a year.

A business that is deemed as a “limited cost trader”, should apply a new rate of 16.5% to their VAT inclusive turnover to calculate their VAT liability, instead of applying the fixed percentage based on your trade or profession. For example, a typical IT contractor, currently on a fixed flat rate of 14.5%, this, of course, means an increase of 2%. Note, that if you are in the first year of the Flat Rate Scheme a further 1% discount still applies.

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