It’s finally here!
The new Tax Allowances, originally announced at Budget 2016, will take effect from the tax year April 2017 to 2018.
The main objective is to simplify the tax system.
As a result, there are two new annual tax allowances for individuals of £1,000 each.
One for trading and one for property income.
Where the allowances cover an individual’s relevant income (before expenses), they will no longer have to declare or pay tax on this income (but must retain the records). The trading allowance also applies to miscellaneous income from providing assets or services, such as hiring tools or offering gardening services.
This doesn’t apply to everyone, unfortunately, the allowance is for individuals only and does not apply to any partnership income for trade or property. Also, it cannot be used in addition to the relief given under the Rent-a-Room legislation. Sole-traders with multiple businesses may not benefit from the changes, as they are applicable to income and profits from all of their trades combined.
Individuals can decide on a year-by-year basis whether to claim the new allowances.
Businesses with higher amounts of income and regular outgoings over £1,000 will be better off claiming actual expenses (as before), whereas small services with minimal costs would benefit from utilising the new trading allowance.
So a New Year brings new changes and new decisions for you and your business. Will utilising the new tax allowance be a good path for you to take, or are you better sticking with the traditional expenses system?
If you’re not sure which is the best route for you, K.A.Farr & Co. are here to help advise you.
To find out more about the services we offer, why not get in touch?
You can call us on 01704 211 434 or fill in our online contact form, and we’ll get back to you!