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January: a time for health kicks, new resolutions and… responding to government consultations!?
Well for Crunch it certainly is a time for consultation responses as we keep banging the drum on behalf of small businesses to make sure that policy-makers don’t forget the 8.5 million people who work in businesses of nine or fewer employees.
Spring Budget Submission
Before every budget the Government invites submissions, and we’ve taken the chance to do so ahead of the March Budget. You can read our submission here, but in summary we’ve said:
We’re a huge sector employing millions making a major contribution to the UK economy. Treasury needs to consider the needs of the sector when planning policies, and model the impacts of tax changes on smaller businesses.
Long term clarity
We welcome the long-term strategy set out for Corporation Tax up to 2020 and call for greater long-term clarity on the strategy for other major taxes.
Simplicity and fairness
We endorse the work of the Office for Tax Simplification and commend a continued focus on ensuring measures are simple and fair.
Changes to VAT Flat Rate Scheme for ‘labour-only’ businesses
One of the surprises from the Autumn Budget 2016 was the new 16.5% flat rate VAT scheme for many typical contractor, consultant and freelance businesses. For a typical one-person limited company in the IT field earning £43,000 annual business income, this amounts to £826 extra tax to pay each year from April 2017.
We think this is an unfair additional burden but there are also some technical issues left unresolved which we have raised in our submission.
New Public Sector IR35 rules
The Autumn Budget also confirmed that changes to IR35 would proceed under the glorious title of “off-payroll working in the public sector”. Extensive documentation has been published as government prepares to go live with the changes this April. Some of the examples raise more questions than answers, which we detail in our submission. Other key points we raise are:
We re-iterate our view that the plans are the wrong approach which will add complexity to the tax system, have chilling effect on micro-businesses and will prove very hard to implement;
The removal of the 5% allowance for a worker’s expenses is particularly harsh and doesn’t reflect the ongoing costs of being in business that they will face;
We do not have confidence that the proposed digital tool for determining a worker’s status is deliverable;
Greater clarity is needed over how Corporation Tax should be handled in light of the payroll deductions the engagers will be making.
We will keep you posted as these issues develop. The more businesses we can engage the better – so do sign up to Crunch Chorus for free to make your voice heard and get a 10% discount on Crunch Insurance.
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A year end can be a daunting undertaking for first-time limited company directors. However it needn't be the end of the world. Here's what you need to know.
The UK has many different tax rates affecting both individuals and businesses - and as a business owner you’ll be affected by all of them.
We'll be covering the budget and highlighting the arising issues and announcements that affect freelancers, contractors, and small business owners.