The autumn statement included the decision to introduce a new flat rate of 16.5% for ‘Limited Cost Traders’ (LCTs) from 1 April 2017. These are defined as people who incur costs on goods in a return period of:
This limit is to be considered separately for each return period. Those within the definition will be responsible for using the new 16.5% rate or the trade-related rate as appropriate.
Goods for the purposes of this measure must be exclusively used for the purpose of the business but exclude the following items:
It will affect contractors, freelancers and micro-businesses who predominantly provide a service rather than goods – including consultants, accountants, writers, dog walkers, builders, hairdressers and photographers.