April 2016 signalled the beginning of a new tax year, meaning that a wide range of government changes to UK tax policy have now come into effect. Turner Little explains the key tax changes small businesses should be aware of heading into the new fiscal tax year.

1. What Do New Tax Changes Mean for Small Businesses
April 2016 signalled the beginning of a new tax year, meaning that a wide range of government
changesto UK tax policyhave nowcome intoeffect.TurnerLittle explainsthe keytax changes small
businesses should be aware of heading into the new fiscal tax year.
Increase in personal allowance
Your personal allowance threshold,the percentage of yourincomeyoudonotpayincome tax on,has
been raised from £10,600 to £11,000. Therefore as of this fiscal year, you and your staff are now
entitled to receive £11,000 tax-free income every year.
On the subject of income tax, if your businessis based in Scotlandyou needto be aware of a major
change.Youwill nowneedtopaythe Scottishrate of incometax (10%) onthe majorityof yourtaxable
income,includingyourwagesandpension.However,youwillpaythe same overallincometax rate as
the rest of the country. Read the government’s resource on Scottish income tax to find out more.
New student loan plans
Whitehall hasintroduced analternativethresholdforanew type of studentloandeduction.This‘Plan
Type 2’ threshold applies to any of your staff who began their academic course on or after 1st
September 2012 and whose home address was in England or Wales when they first applied for a
studentloan.Thiswill existalongside PlanType 1,the currentthresholdforstudentloandeductions.
If youemploystaff whoare eligible forstudentloandeductions,youwillneedtoindicate whichplan
youare requiredtooperate foreachemployeeviayourpayrollsoftware.The StudentLoansCompany
has compiledaguide explainingthisissueinmore detail andyoucanalsofindinformationat gov.uk.
The National Living Wage
As TurnerLittle alreadynoted,The National LivingWage wentintoeffecton6th
April 2016. Fromthis
pointon,youare requiredtopayall staff aged25 and overaminimumsalaryof £7.20 perhour.If you
fail to implement The National Living Wage, your company could face significant financial penalties
and be added to Whitehall’s public register of firms which have not adhered to the new policy.
Raising VAT threshold
The governmenthasraisedthe Value AddedTax (VAT) registrationthresholdto£83,000. You will not
be requiredtoregisteryourfirmforVATuntilyoursalesreachoreclipsethislimitduringany12month
period. Also, the de-registration limit has been increased to £81,000. If your venture is already
registeredforVATand your salesfail to hit £81,000 duringany 12 monthperiodyou can de-register
for VAT. You must be confident, however, that your sales will also fail to eclipse £81,000 in the
following 12 month period to be eligible to de-register for VAT.
Employment allowance alterations
Employment allowance (£2,000 for the majority of employers during the 2015 fiscal year) is a
reductionbusinessescansetagainsttheirNational Insurance costs.Thishasbeenraisedto£3,000 but
the allowance nolongerappliestocompanydirectorswhoare theirfirm’ssoleemployee.Thismeans
that evenif you were eligible forthisallowance before,youmayno longerbe able to receive itnow.
Read the government’s guidance on employment allowance to learn more.
Employer National Insurance contributions for apprentices

2. Do youemployapprentices agedunder25 whoearn under£3,583 permonthor £43,000 everyyear?
You are no longer requiredto pay employer National Insurance contributions on these apprentices’
earnings;theynowfall underanewNational Insurance category,‘H.’Update anyeligible apprentices
NI detailson yourpayroll software,makingsure youselect‘H’as theircategory letter,toimplement
this change within your company.
Dividend taxation changes
Turner Little has already explained that UK dividend taxationlaw has changed; specifically it will be
replacedwithanew‘dividendallowance.’Youwill pay0% tax onyourfirst£5,000 of dividendincome
perannum.HoweverasaUKresident,youwillpaytax onanyextradividendincomeatthree separate
rates; find out more on the government website’s dividend taxation page.
Turner Little
Withthe implementationof new policies,yourcompany’stax obligationsmayhave changed.If thisis
the case, itis vital that youinvestinthe infrastructure requiredtohandle yourfinances.TurnerLittle
can provide you with advice on setting up UK bank accounts, so you can capitalise on the first-rate
financial services required to handle your companies tax matters throughout the year ahead.
Turner Little was foundedin 1998 and it has since become a well-established UK based professional
Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as
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