Autumn Budget 2015 – Overview for Small Business

The Autumn Budget 2015 – Key Points

Sole Traders / Partnerships / Landlords / Self Employed

By 2020 a new Digital tax system will be put into place to enable individual taxpayers to submit their tax affairs every quarter. The aim is that the Government would like to align payment dates so that you pay your tax on a more frequent basis, possibly every quarter. Very little detail has been provided as to how this will work in practice but many of the online cloud bookkeeping providers are liaising with HMRC on how their systems can integrate with HMRC to facilitate this process and they hope to be up and running by 2016.

This could be a positive move for those people that currently pay their tax to HMRC “on account” ie in advance of knowing the actual tax bill. In the new scenario you will pay tax on a regular basis on the actual figures for that period and not on figures that have been based on the previous year. However this will also mean that you are very likely to end up with paying tax every three months rather than one or twice a year as per the current method. This in turn asks the question as to how Capital Allowances and Annual Investments allowances will be calculated and input into the tax figures as currently this is calculated on an annual basis.

The new process raises many questions as to how the system will operate, of which none have yet been answered by HMRC but it does clarify that accurate bookkeeping will be essential on a quarterly basis to ensure the correct tax is paid, which in turn may mean more time is needed to process the paperwork on at least a quarterly basis for those businesses that tend to collate all of their figures only at year end.

Landlords

Landlords have again been the attention of focus – from April 2016 if you are buying a second home or a buy to let you will need to pay an additional 3% stamp duty on the purchase price. Although there may be an exemption for Corporates and entities that own more than 15 properties.

Property Purchases / Capital Gain Tax

During 2017/18 Stamp Duty tax will be payable within 14 days of a property purchase rather than the current 30 days.

From 2019 Capital Gains Tax due on the disposal of a residential property (such as a buy to let property or second home) will be payable within 30 days of completion. At the moment the Capital Gain is included on the tax return of the year the property is sold which can mean that the Capital Gain tax is not paid for up to a maximum of 19 months.

General Small Business

Small business rate relief has been extended for a further year for those that are eligible.

As per the Summer budget – every employer (not sole director companies) will be entitled to an Employers National Insurance Allowance of £3,000 which starts in April 2016