November 23, 2016 at 3:35 PM
By Sarah Eble
This afternoon, The Chancellor announced economic forecasts for the coming years, as well as some changes that will affect small businesses from April 2017, especially if you employ staff, are seeking investment, or own (or are thinking of buying) an electric car. Here's what you need to know.
The UK economy is predicted to grow
The Office for Budget Responsibility (OBR) is predicting that the UK economy will grow by 2.1% in 2016, 1.4% in 2017 (same as Germany, higher than France & Italy), and then by 1.7% in 2018.
What you need to know if you employ staff
- From April 2017, the use of salary sacrifice will no longer be allowed, except for ultra low emission cars, childcare, pension contributions & the cycle-to-work scheme. Long-term schemes covering accommodation, school fees and cars already in existence will be protected until April 2021. Arrangements in place prior to April 2017 will be protected until April 2018.
- For a lower rate taxpayer paying £50 per month under salary sacrifice, this will mean an increase of £192 a year in tax and National Insurance. For the employer, this leads to an increase of £82.80 a year.
- For a higher rate taxpayer paying the same amount, this would mean an increase of £252 a year in tax and National Insurance. The increase for the employer is £82.80 a year.
- Employer National Insurance (NI) is changing. The threshold for Employer and Employee NI will be the same at £157 per week from April 2017. This alignment of the thresholds will cost businesses employing staff a maximum of £7.18 per employee per year.
The National Living Wage
- This will increase from £7.20 to £7.50 from April 2017.
For growing businesses
- Are you a business looking for investment? £400m of additional funds have been made available for startups through the British Business Bank. Other great places to look for investment are MarketInvoice and Funding Circle - we've heard good things.
- Good news too if you're looking to export. The Chancellor has announced a doubling of UK Export Finance capacity.
- As previously announced, Corporation Tax will fall by 1%, to 19% in April 2017, and then to 17% from April 2020.
- The tax free personal allowance rises to £11,500 in April 2017, and then to £12,500 by the end of this parliament.
- The higher rate tax threshold will increase to £50,000 by the end of the parliament.
- Insurance Premium Tax to increase from 10% to 12%
- Rural Rates Relief to be 100%.
Interesting news for electric car owners
- There's now a 100% first year capital allowance for installing electric car charge points. Another reason to buy a Tesla? Find out why they're proving so popular amongst business owners here.
Your savings and investments
- A market-leading savings bond is set to be announced in the next Budget. Expected to pay 2.2% gross interest with a 3 year term, there will be a £3k maximum deposit for savers.
- A reminder that you only have a few months left (until 5 April 2017) to use up this year's ISA allowance of £15,240.
Would you like to know more? We're here to help
Please get in touch with our Tax Expert, Sarah Eble on 0845 201 1580.