New tax year business changes you need to be aware of this April

An overview of the main changes taking effect from April  

A number of business tax changes and reliefs will take effect from April 2017. Here’s an overview of the main changes for the new tax year.
Corporation tax
The rate of corporation tax will reduce to 19% from April 2017. The tax rate is due to be cut to 17% by 2020.
VAT thresholds
The taxable VAT registration threshold will increase from £83,000 to £85,000. The deregistration threshold will increase from £81,000 to £83,000 per annum.
Flat rate scheme
Businesses classified as ‘limited cost traders’ and eligible to use the flat rate scheme will have to account for VAT at a fixed rate of 16.5% of their relevant gross turnover.
‘Limited cost traders’ are those that spend:
  • less than 2% of their VAT flat rate turnover on goods in accounting, or
  • more than 2% of their VAT flat rate turnover but less than £1,000 per year.
Capital goods such as food and drink, new equipment and vehicles are not included.
National living wage
The national living wage will increase to £7.50 an hour on 1 April 2017. Eligible workers over the age of 25 are entitled to the new rate.
The national minimum wage for those aged 21-24 will increase to £7.05 an hour.
Age
From 1 April 2017
25 and over
£7.50
21 to 24
£7.05
18 to 20
£5.60
16 to 17
£4.05
Apprentices*
£3.50
*Apprentices rate for those aged 16-18 and 19 or over in their first year.
Mortgage interest relief
Relief for finance costs on residential properties will be restricted to the basic rate of income tax. This will be introduced gradually from 6 April 2017.
Landlords will only be able to deduct a portion of their finance costs from their property when calculating rental profits.
The changes will be phased in over the next 4 years:
Tax year
Percentage of costs deducted from profits
Percentage of costs as a basic rate deduction
2017/18
75%
25%
2018/19
50%
50%
2019/20
25%
75%
2020/21
0%
100%
Finance costs include interest on loans to buy furnishings and fees incurred when taking out and repaying mortgages and loans.
Talk to a member of the Condies team about how these changes might affect your business.

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Condies is a progressive chartered accountancy practice with offices in Dunfermline and Edinburgh. The firm was established in the 1920s and has a growing client base throughout Scotland, ranging from individuals and family businesses to professional partnerships and large commercial companies. Condies offers a range of compliance and value-added services and specialises in a variety of industry sectors.