Five Key Changes to Expect in the New Tax Year

Five Key Changes to Expect in the New Tax Year

Spring is already coming up fast. It wasn’t that long since business owners were feeling that January Self-Assessment panic. Now there’s the next new date to bear in mind, the end of the tax year on April 5th. Several things are changing after April 6th that could affect your business.

Here’s a list of things that are set to change after April 6th that might end up affecting the way you do business:

 

National Living WageNew Tax Year

It’s been a year since the introduction of the National Living Wage that replaced the National Minimum Wage for most people. It’s set to increase from £7.20 to £7.50 an hour for everyone over the age of 25. For those under, the National Minimum Wage rate still applies.

Business rates

Business rates are to increase in April for many firms. As they are based on the rental value of a business property, those in London are to expect a hefty increase due to the rising cost of property there.

Rates change after a revaluation ever five years. However, the last one was postponed by two years so now the increases are likely to be even more drastic. The rateable values were published last autumn but won’t come into effect until April.

On the other hand, thousands of businesses are expected to have lower rates or even no rates payable at all.

Personal allowance

For the new tax year, basic Personal Allowance will be rising to £11,500 and the limit will be £33,500. This means that the new threshold for starting PAYE is £221 a week or £958 a month. So you may have to take a look at PAYE again for some employees.

Apprenticeship Levy

The Apprenticeship Levy is due to come into place on April 6th and you’ll be liable to pay it each month if your company has an annual wage bill of more than £3 million.

Employers will have an Apprenticeship Levy Allowance of £15,000 a year. This reduces the amount of the levy you have to pay by £15,000.

The levy is charged at 0.5% of your annual pay bill. You’ll be responsible for telling HMRC about how much Apprenticeship Levy you owe each month if applicable.

Vehicle Excise Duty

The new rules to VED will affect anyone buying a new car after April 2017 so if your business relies on vehicles or a lot of travel, this is worth bearing in mind. The new rules mean that tax on new cars will be set to increase to make up for the tax the government has been losing on low emissions cars. Some people will be worse off, while others will be better off in the long run.

Only cars with no emissions will qualify for tax free status after VED comes into place. So those who were previously exempt with low-emissions cars will now have to pay. For the first year a new car is bought, owners will face a tax increase followed by a flat rate of £140 a year in the following years. For cars costing more that £40,000 an additional rate will be added at a rate of £310.

These changes don’t apply retrospectively so some people have been eager to buy before the end of the tax year, particularly those planning to buy low emissions cars. Others planning to buy vehicles with higher emissions might want to wait until after April 5th because the rates will be lower long term.

LISA

The Lifetime ISA will come into place in the new tax year. It’s a way to help people save for buying a property or saving a pension.

Though it might not directly affect you or your business, it’s something worth bearing in mind for yourself, especially if you’re going to be missing out on a workplace pension. However, experts are quick to point out that a pension scheme is better and the LISA shouldn’t be used to replace one but can act alongside it.

Some are expecting people to start opting out of auto-enrolment, seeing the additional 25% paid in by the government as an alternative to a workplace pension scheme. However, those that do this will be missing out on money from their employer. Whatever your employees choose to do, just remember that it’s illegal to encourage opt outs for your workers.

 

Have we missed anything out? What changes are you looking forward to or dreading about the new tax year? Let us know what you think in the comments below!

 

Kara is a content writer for The Accountancy Partnership.