Business owners reckon that tax changes will impact them more than economic upheaval in 2017, as small businesses ready themselves for April’s flat-rate VAT hike.
In a recent Simply Business poll, 54 per cent of 500 respondents said that changes to the tax system will hit them hardest this year.
Meanwhile, 28 per cent said that large-scale economic changes will have the greatest effect.
Government incentive changes only received 11 per cent of the vote, and just seven per cent of businesses reckon that technology changes will have the biggest impact.
So what are the tax changes that will come into effect into 2017?
But one of the biggest changes is a rise in the amount of VAT that many small businesses will have to pay.
The flat-rate VAT scheme was introduced ten years ago, so that small businesses could pay a standard rate rather than make complex calculations. The flat rates depended on the type of business, with farmers paying as little as 6.5 per cent, and other firms paying a standard rate of 14.5 per cent. But the government believes that businesses are abusing this scheme, so it has changed how it works.
As of April this year, the flat rate will go up to 16.5 per cent across the board for ‘limited cost traders’ - businesses that only spend a small amount of their turnover on goods. This is mainly businesses that sell a service rather than products, for example hairdressers, IT contractors, accountants, and photographers. You have to meet specific criteria to qualify as a limited cost trader - there’s more information in this government guidance note.
Critics believe that the changes will leave small businesses and self-employed workers out of pocket.
In another Simply Business poll, 87 per cent of voters said that the changes to the flat-rate VAT scheme were unfair.
Will you be impacted by 2017 tax changes? Tell us in the comments.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
22 June 2020 • 9-minute read
How to start a clothing business. It can be an all-consuming process but with that first sample run and customer sale comes great…
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2021 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.