Watling & Hirst Ltd

Autumn Statement

Apart from the exciting news that the budget statement will now be in the autumn rather than spring (which is presumably to give HMRC more time each year to get their software updated and working correctly), there were a couple of other important announcements made:

VAT Flat Rate Scheme

The change in rules mean that if you are in the scheme and your purchases of goods (not services) is less than 2% of your turnover then the rate you use will have to be 16.5% in future. This works out at about 19.8% of your net turnover so the saving is a whole 0.2%. Apart from the administrative time saved on the input side the savings from being in the scheme will be minimal.

This change will impact businesses who mainly supply services, such as consultants and IT contractors.

Insurance Premium Tax

Another "stealth tax" that is increasingly being used to fill the black hole is IPT, which is rising from 10% to 12% from June 2017, the third rise in 18 months. Commentators in the industry expect the increases to continue until the rate matches VAT which is currently 20%.