Spring Budget 2017
Future Taxes Which May Affect You or Your Business
Dividend Allowance Reduction
As announced at Spring Budget 2017, the government will legislate in Finance Bill 2017 to reduce the tax-free allowance for dividend income from £5,000 to £2,000. This will reduce the tax differential between the employed and self-employed on one hand and those working through a company on the other, and raise revenue to invest in our public services. The change will take place from April 2018
Making Tax Digital
As announced at Autumn Statement 2015 and confirmed at Budget 2016 and Spring Budget 2017, the government legislate in Finance Bill 2017 to implement digital record keeping and updating by businesses, the self-employed and landlords, as part of Making Tax Digital for Business.
As also announced the start date for mandation for unincorporated businesses and landlords with gross income (turnover) below the VAT registration threshold will be deferred until April 2019
Increase the Rate of Class 4 National Insurance Contributions (NICs)
The government has already announced that it will abolish Class 2 NICs from April 2018. On its own this would increase the differential between the rates of National Insurance paid by employees and those paid by the self-employed.
As announced at Spring Budget 2017 the government will legislate to increase the main rate of Class 4 NICs from 9% to 10% with effect from 6 April 2018 and from 10% to 11% with effect from 6 Aprill 2019. Since April 2016, the self-employed also have access to the same State Pension as employees, worth £1,800 a year more to a slfl-employed individual than under the previous system.
Loss Relief Reform for Limited Companies
As announced at Budget 2016, the government will legislate in Finance Bill 2017 to reform the rules governing corporate losses carried forward from earlier periods.
The reform will give all companies more flexibility by relaxing the way in which they can use losses arising on or after 1 April 2017 when they are carried forward - these losses will be usable against profits from different types of income and profits of other group companies.
The reform will also restrict the use of losses carried forward by companies so that they can't reduce their profits arising on or after 1 April 2017 by more than 50% - this restriction will apply to a company or group's profits above £5 million - carried forward losses arising at any time will be subject to the restriction.
Pensions :Reducing the Money Purchase Annual Allowance (MPAA
As expected following the recent consultation exercise, the MPAA will be reduced from £10,000 to £4,000 with effect from 6 April 2017. The reduction is intended to limit the extent to which individuals can “recycle” their pension schemes and gain a second round of tax relief on pension contributions.
Income Tax: Increase in Cash Basis Threshold
The threshold for the simplified cash basis of accounting for individuals and unincorporated businesses will rise to £150,000 on 6 April 2017. This was previously announced in a policy paper dated 31 January 2017 but is included again in the Budget announcements. The earlier announcement included details of prohibitions on deductions for specific items of capital expenditure including land, cars and items which are not depreciating assets.
VAT: Registration and Deregistration Thresholds
From 1 April 2017 the VAT registration threshold will increase from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000. By increasing the VAT registration threshold HMRC estimate that it will prevent 4000 small businesses from having to register for VAT by the end of 2017-18.
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