Autumn Statement 2016; how will it affect you and your Dental Practice?
DENTAL BULLETIN, ISSUE 36
On 23rd November Chancellor Philip Hammond delivered his Autumn Statement 2016 in which he announced that this would be the last Autumn Statement, with a move next year to a Spring Statement and Autumn Budget. The idea is to provide more stability for businesses and individuals in respect of changes to taxation, so that they only occur once a year.
This will obviously help dentists better plan their finances.
What other announcements have been made? How will they affect you and your dental practice?
– The Government reiterated its commitment to simplifying business tax with the aim of reducing corporation tax to 17% by 2020. There has already been a reduction from 28% in 2010 to the current rate of 20% to help businesses grow. For those dental practices considering incorporation, now may be the time to take this step in order to benefit from these savings.
– However, from April 2017 employer and employee national insurance contributions will be aligned and will be paid on earnings over £157 per week. It is estimated that the maximum cost to businesses will be £7.18 per employee.
– Also, the rates for National Minimum Wage will increase from 1stApril 2017 as follows:
1. National Living Wage (age 25 and over) will increase from £7.20 to £7.50.
2. Standard adult NMW rate (age 21 to 24) will increase from £6.95 to £7.05.
3. Development NMW rate (age 18 to 20) will increase from £5.55 to £5.60.
4. Young workers NMW rate (age 16 to 17) will increase from £4.00 to £4.05.
5. Apprentice NMW rate (age under 19 or in the first year of an apprenticeship) will increase from £3.40 to £3.50.
Some considerations about the Autumn Statement 2016
Many of you will already be paying staff above the National Minimum Wage; having said that, these increases will be continuing year on year and with the new National Living Wage it may not be long before your wages are no more than the statutory minimum. This means in order to attract and retain the best staff you may need to budget to increase your practice’s wage bill. Further, whilst pension auto enrolment is now part and parcel of employment law and was not a topic in this Autumn Statement, for many small businesses the dates to comply are in 2017, resulting in more staffing costs in the coming years.
– The Government will raise the tax free personal allowance to £12,500 and the higher rate tax will start at £50k by 2020.
– Salary sacrifice schemes to be scaled back. The schemes that can continue to benefit from tax and NICs relief if provided through salary sacrifice will be limited to; enhanced employer pension contributions, childcare benefits, cycle to work schemes, and ultra-low emission cars. If you offer any schemes outside the exceptions listed, you should review the cost implications to your practice as a result of these changes.
– The Finance Bill 2017 will introduce a 30% fixed rate penalty for businesses and company officers who participate in VAT fraud.
The Sugar Tax
In other news, draft legislation for the ‘Sugar Tax’ was published this week, which is due to begin from April 2018. There will be two bands depending on the amount of sugar in soft drinks per 100ml; the lower band will be for drinks with 5g or more and the higher band will be for 8g or more. Pure fruit juices, sugary milkshakes and yoghurt drinks will be exempt from the tax.
Whilst the ‘Sugar Tax’ may provide a short term solution to the consumption of soft drinks, long term solutions need to be put in place to tackle obesity and oral hygiene. As we often say here at JFH Law ‘prevention is better than cure’.
Laura Pearce, Senior Solicitor