Press release: Shortened Finance Bill provides opportunity to rethink allowances for micro-enterprises

The decision means that the proposed legislation on the new allowances available from 6 April 2017 for very small trading and property businesses¹ will not be included in the abbreviated pre-election Finance Act. Instead, they will likely form part of a separate post-election Finance Bill, which should allow for greater scrutiny.

The ATT has previously expressed concern² about the complexity of the legislation for the modest allowances which are designed ‘to provide simplicity and certainty regarding income tax obligations on small amounts of income from providing goods, services, property or other assets’,³ by providing full relief from tax on the profits of businesses with gross receipts of no more than £1,000 and providing an optional entitlement to a deduction of £1,000 (in place of normal deductions) for businesses whose gross receipts do exceed £1,000.

Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said:

“The ATT saw the original idea behind the allowances as having the potential to reduce the administrative burden on very small businesses, remove the need to consider whether a micro-enterprise really was a taxable business and to regularise the current non-reporting of the income of such businesses.

“We have been concerned that the Finance Bill provisions that were drafted to implement these two simple and very modest allowances in relation to trading and property micro-enterprises ended up introducing so many complexities, uncertainties and anomalies that would prejudice the understanding, take-up and practical working of the new allowances.

“The exclusion of this legislation from the pre-election Finance Act and the strong probability that provisions will be included in a post-election Finance Bill give an opportunity for reconsideration by HMRC of how to ensure that the allowances are as user-friendly as possible and greater Parliamentary scrutiny. The Association will be pleased to provide whatever assistance it can to make sure that any revised proposals are as straightforward and understandable as possible.”

 Notes for editors

1. The provisions formed Schedule 6 of the Finance Bill that was published on 20 March 2017
2. For ATT’s notes on the provisions as submitted to HMRC on 13 April 2017, see link here
3. See paragraph 53 of the Explanatory Note which was published alongside the Bill
4. During today's Finance Bill committee stage debate the Government deleted 72 out of 135 clauses and 18 out of 29 schedules