The Spring Budget 2017 and the Flat Rate Scheme
March 16 2017, 0 Comments
There has been a lot of publicity regarding the March 2017 budget regarding class 4 National Insurance contributions but very little regarding changes to the Flat Rate Scheme and limited cost businesses.
We are aware at Accountz.com that a large number of our Startup+VAT and Suite customers are management consultants and maybe affected by this change. So below is a brief overview of the changes in legislation:
Flat Rate Scheme (FRS):
A ‘limited cost’ business is one which spends the following on relevant goods:
- Less than 2% of its VAT flat rate turnover, or
- Greater than 2% of its VAT flat rate turnover but less than £1,000 per year
Relevant goods are those which are used exclusively for business purposes, but exclude the following:
- Capital expenditure goods of any value
- Goods for re-selling or hiring out (unless selling and hiring is the main business activity)
- Food and drink for the business or its staff
- Vehicle costs including fuel (unless the business is operating in the transport sector using its own, or a leased vehicle)
- Goods for resale, leasing, letting or hiring out (if the main business activity is not ordinarily selling, leasing, letting or hiring out of such goods)
Notice 733 Flat rate scheme for small businesses provides guidance on this.
Other general VAT news that you may have missed:
Oh... And the Dividend Allowance:
From 6 April 2018 the tax free dividend allowance (introduced in April 2016) is to be reduced from £5,000 to £2,000
If you have any questions on how this can be implemented in our packages please email support@accountz.com