Changes of UK Tax Law as from April 2017
The changes introduced by the UK government consist of the following:
Flat rate scheme for the VAT
The new scheme is designed especially for small companies and provides a simplified method to keep records of their sales and purchases to benefit from a flat rate percentage to gross turnover.
To be eligible for the flat rate, a company must apply to HMRC for approval and their VAT turnover must not exceed £150,000 – excluding the VAT.
The VAT flat rate is not beneficial for all entities and the entrepreneur is advised to seek professional assistance.
Corporate tax is reduced
The UK authorities announced a reduction of the corporate tax rate from 20% to 19% which will affect all the companies paying corporate tax at the main rate.
The main rate does not however apply to profits from oil rights and extraction, the so called “ring fence” profits.
The new corporate tax rate of 19% will remain until 2020 where a further reduction will take place resulting to an effective corporate tax rate of 17%.
Tax Relief for buy to let
There are also new provisions with respect to how the tax is calculated for buy to let properties. Under the new provisions, the income received by the landlords will remain taxable and must be declared on their tax return.
In addition to the above, individuals no longer can deduct mortgage interest from pre tax income.