This month, Jack Posner (principal) and Darren Stone (manager) of Leon and Company Chartered Accountants in Leeds write about the recent Budget and summarise some key points of interest to both business owners and individuals with personal tax requirements.
As we approach Spring, it is often a time for new beginnings. So, it is ironic that last week, the Chancellor, Philip Hammond, set out the last Spring budget, preferring to revert to a more traditional Autumn slot. And although upbeat in nature, some commentators have slated parts of this budget as an attack on the self-employed and business owners.
• Class 4 National Insurance Contributions (NICs): With the abolition from April 2018 of Class 2 NICs for the self-employed, Class 4 NIC rates will increase from 9% to 10% from April 2018, with a further increase to 11% from April 2019. This point has received much criticism from far and wide, and following this, the Prime minister announced she will delay legislating to implement the controversial rise until the autumn. But how this ultimately pans out is yet to be seen.
• Dividend allowance reduction: Following last year’s introduction of the dividend allowance, it has now been reduced. From April 2018, the tax-free allowance for all dividend income will be reduced from £5,000 to £2,000. Some individuals may want to consider voting early dividends to take advantage of the outgoing rules ahead of next April, but it would always be advisable to seek professional advice first.
• Making Tax Digital: Many by now will be aware of the incoming quarterly, digital record keeping by businesses, the self-employed and landlords. The start date for the implementation of this, where turnover is below the VAT registration threshold, has now been deferred until April 2019. For those businesses above the threshold, this will commence from April 2018.
• Business Rates: On a final note, business rates have been a centrepiece of the budget. The Chancellor has promised further support for businesses set to face significant increases in their bills. Furthermore, local authorities have been granted a fund to allocate on a discretionary basis.
This is not an exhaustive list of all the budgetary announcements, but just a summary of some key changes that we believe are of relevance to the readers of J-Life.