Blogs/Vlogs

Spring Budget 2017: the three main tax announcements

9 March 2017

The Chancellor presented his Budget to Parliament yesterday, with the three main tax announcements as follows:

  1. From April 2018, for self-employed individuals Class 2 National Insurance contributions (NICs) are being abolished with the main Class 4 NIC rate increasing to 10%.  A further increase in the main Class 4 NIC rate to 11% will be brought in from April 2019.  Whilst it is difficult to say for certain until the thresholds for the relevant years have been announced, it is anticipated that these changes could cost a self-employed individual up to £220 for the 2018/19 tax year and up to £588 for the 2019/20 tax year.
  1. Also from April 2018, the tax free dividend allowance currently available to each individual of £5,000 will be reduced to £2,000.  Any dividends received in excess of this allowance and not covered by an individual’s tax free personal allowance will be taxable at 7.5%, 32.5% or 38.1% depending on the level of their non-dividend income.  Therefore, this change could cost individuals up to £225, £975 or even £1,143 per tax year, making it key to ensure that allowances are utilised where possible before the reduction takes place.
  1. Prior to yesterday’s budget it was expected that Making Tax Digital (MTD) was to become mandatory from April 2018 for all unincorporated businesses (including landlords) with turnover in excess of £10,000 per year.  The Chancellor announced yesterday that for unincorporated businesses with turnover below the VAT threshold (£85,000 from 1 April 2017) MTD will be delayed by 12 months until April 2019.  This was a welcome announcement for many businesses, although more guidance is still needed on MTD ahead of its introduction from April 2018 for the larger unincorporated businesses.

If you think that you might be affected by any of the tax changes announced in yesterday's  Budget, please contact me or speak to your usual UHY adviser.

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