New tax year: here’s a few things you should know

With the new tax year upon us, Federation of Small Businesses (FSB) has released a list of 11 changes small and medium sized businesses need to know about for 2017:

1. New Business Rates

After all the controversy, the new commercial property valuations – which are used to calculate Business Rates – came into force from 1 April in England, Wales and Scotland. Those in England whose bills have increased steeply may be eligible for a temporary reduction, at the discretion of their local authority. English councils are working out who is eligible after the government announced extra money for transition funds in the March Budget. Separate local and national rate relief schemes are in place in Wales and Scotland – and must be applied for through your local council.  Northern Ireland has a completely different system to the rest of the UK and the NI revaluation was completed last year.

2. Changes to appealing Business Rates

The appeals system, which you might use if you think your premises has been overvalued for Business Rates purposes, has changed in England and Wales. There is now a three-stage process and if a small business wants to take its appeal all the way, there is a £150 upfront charge which is only refunded if the appeal is successful.

3. Code of conduct for Business Rates appeals firms

There is some extra protection for small businesses against bad practice from some rating consultancy agencies which offer to help with valuation appeals (but often with stinging charges). If you choose an agency which is registered with the Royal Institute of Chartered Surveyors (RICS), then there is a newly strengthened RICS code of conduct which the firm will be signed up to.

4. Introduction of the Lifetime ISA

From 6 April, the Government introduces a new individual savings account: the Lifetime ISA. It has been particularly targeted at the self-employed, with FSB research showing just 30 per cent of self-employed people are saving into a private pension. Savers need to be under 40 and can then put up to £4,000 a year into the new ISA and the Government will top up the savings with a 25 per cent bonus.

5. National Living Wage

The National Living Wage for employees aged 25 and over went up 30p an hour from 1 April to £7.50. The hourly rate for 21-24 year olds is now £7.05; for 18-20 year old it’s £5.60 and for under-18s £4.05.

Read more about the increases to the National Living Wage.

6. Water market changes

Most businesses in England can now choose which company they want to supply their retail water services. Those eligible are no longer tied to their regional water firm. And they can choose, if they prefer, to get their water supply from one firm and wastewater services from another. A similar system has been in place in Scotland for some time.

7. New £1 coin

The new 12-sided £1 coin arrived in circulation on 28 March. 

8. Charges for hiring non-EU workers

From this month businesses face an annual fee to employ each new worker from outside the European Economic Area on a Tier 2 (skilled workers) visa. The standard so-called “Immigration Skills Charge” is £1,000 a year, although for many small businesses there will be a lower rate of £364 a year.

9. VAT Flat Rate Scheme

There are changes to the tax rates and eligibility criteria for some small businesses which use this, rather than the standard VAT system. The change affects those deemed to be a “limited cost trader” – where your VAT-inclusive expenditure is a very small chunk of your turnover.

How does it work? Are you affected? The government has a detailed Q&A here. Section 4.4 deals with the specific criteria.

10. Tax changes for contractors to the public sector

This affects the IR35 tax status for those who are self-employed and who undertake public sector contracts. It is now up to the contracting public sector body – not the individual contractor – to decide whether they come under the scope of IR35. If they do, they will be treated like an employee for tax purposes (but not for employment law purposes)

11. Better payment practice

There is now a requirement for large quoted companies to give details of how promptly they pay small business suppliers. Among the requirements for big firms affected will be a duty to reveal the proportion of invoices paid within 30 days, between 31 and 60 days, and above 60 days (which the government officially deems to be poor payment practice).

Specialist advisers to UK’s small and medium sized businesses

At Beavis Morgan, we have extensive experience of providing specialist advice and planning to small and medium sized (SME) businesses across a range of sectors. We work with our clients to put processes in place which make it easier to run your business and to maintain effective management of your company’s working capital. We also assist with management accounts, enabling better control of your financial situation and awareness of the business in real time, enhancing planning for the peaks and troughs.
If you have any concerns or queries relating to any of the above points raised within this article, contact Steve Govey or your usual Beavis Morgan Partner.

We are on hand to assist you to remain profitable and increase your net worth.