The UK’s Chancellor of Exchequer presented the Spring Budget 2019 on 13 March 2019, and the IOM Treasury Minister presented his speech on 19 February 2019.
Invicta Accounting analyse all budget statements to assess how they affect our clients so that we are better able to advise them.
This article looks at of how the changes affect specifically sole traders, employees and SME companies.
Main Issues – Taxes
- No major tax announces during the speech.
- Emphasis though on “digitalizing tax” i.e. Digital Services Tax (DST) – a move to do away with manual tax filings (both self-assessments and company taxes) and rather filing returns online, including Making Tax Digital (MTD).
- However, outside the speech, there is a major launch by HMRC to crack down on self-employed contractors, with concerns rising of tax avoidance.
Isle of Man
- Increase in personal allowances to £14,000, which means lower individual income taxes.
- Higher National Insurance limits for individuals, which means lower individual national insurance contributions.
This is no doubt the biggest issue of discussion in both speeches.
What’s the impact to UK businesses?
Small UK businesses, specifically SMEs who rely on foreign trade, would benefit more if they start thinking about good financial planning and forecasting, and possible increase sin taxes. Small businesses need to start forward-thinking in terms of finances.
What about Isle of Man businesses?
The IOM is not part of the EU or UK, therefore there is limited evidence to suggest that Brexit will impact the IOM, though the UK remains the IOM’s most important trading partner. However, the IOM’s relationship with the EU is dependent upon the UK’s EU membership. The IOM government has budgeted almost £2.5m to the “Brexit Fund” to ensure smooth transition upon UK’s departure from the EU. Despite Brexit, the trading relationship between the IOM and the UK will remain intact. So, there is presumably minimal impact on the IOM’s SMEs especially those trading with the UK, and there is unlikely to be changes to the IOM’s regulations and taxes, even in a no-deal Brexit scenario. However, IOM SMEs would still need to consider thinking ahead, and making contingencies in worst-case scenarios, particular declining sales as a result of Brexit’s impact on forex rates. Therefore, budgeting and forecasting is crucial.
Other important highlights
Increased growth prospects despite Brexit concerns.
Isle of Man
Capital investment by the IOM government (e.g. Douglas Promenade project), which will increase potential for contracting to the self-employed and contractor businesses.
The dates for the next Budgets are yet to be announced.
Contact Invicta Accounting on 01624 672 358 or email@example.com to discuss your accounting requirements or if there are any matters within the budget that you would think may affect you.