Many of the provisions announced in the March budget have had to be dropped as there was not enough time to get them through Parliament before the Election. Unless you spend all your time reading HMRC notices you can be forgiven for being confused so below is a summary of which announcements will be implemented and which have been dropped.

These provisions will still be implemented:

• 2017/18 income tax rates and bands
• Reduction in corporation tax
• IR35 contractors and the public sector
• Abolition of employee share schemes
• Changes to taxation of salary sacrifice schemes
• Increases in IPT rates
• Changes to alcohol and tobacco duties
• Soft drinks levy

These provisions will be dropped:

• Changes to corporation tax loss regime and corresponding anti-avoidance provisions
• Reduction of dividend allowance from £5,000 to £2,000
• Restriction of pension money purchase allowance
• Deemed domicile provisions
• All investment relief provisions (EIS, SEIS, VCT, etc)
• Making tax digital legislation

Whether all these provisions will be re-instated in a post-election budget is debatable, but our Autumn e-newsletter will feature an update.

What is certain is that digital tax reporting is coming and all business owners should use it as an opportunity to review their systems. If they currently only prepare figures annually then they will find it much more efficient to use online accounts software. It will also provide much more useful information about the state of their business.

Normally the VAT amount a business pays is calculated by deducting the VAT incurred on what they buy from the VAT they charge on what they sell. Small businesses have the option to use the flat rate VAT scheme. The VAT paid is a percentage of the gross sales value. The VAT percentage depends on the type of business and is intended to give a VAT payment much the same as that expected to be paid by an average business in that category.

However HMRC has identified that this option is being abused by some businesses who have limited costs. A new 16.5% VAT flat rate will apply from 1 April 2017 to businesses whose VAT inclusive expenditure is less than 2% of their VAT inclusive sales or less than £1,000 pa. This may affect labour-only contractors who have low overheads.

Users of the VAT flat rate scheme have until April to assess whether they will be affected by the new legislation. HMRC has said that they will provide an online tool to help determine whether they should use the new rate.

The introduction of the auto-enrolment pension is now well advanced, with many small businesses having already set up a pension scheme for their employees.

Small business owners who have yet to action this are advised to urgently check their staging date as there are penalties for non-compliance. They should also contact their payroll provider to see what additional information is needed.

Businesses where the owner/directors are the only people on the payroll are exempt, but they still need to tell the Pensions Regulator.