Well, the Chancellor seemed to enjoy that, cracking jokes at himself, the PM and the Opposition. Perhaps Box Office Phil isn’t such an ironic nickname after all. Overall, he had very little to say on tax other than the headline increase in the rate of NICs for the self-employed and the reduction in the tax-free dividend allowance. Still, now is as good a time as ever to pull together the main changes coming up over the next few years. As always, we had our clients in mind when pulling together the list below and so this should be relevant to you.
From April 2017
- Personal allowance increased to £11,500 and higher-rate threshold to £33,500. This means you can earn £45,000 before paying Income Tax at the higher rate. The government intends to increase this to £50,000 by the end of the Parliament.
- Cash basis extended to more sole traders and partners (by virtue of the increase in the entry limit to £150,000) and to landlords.
- Rate of Corporation Tax reduced to 19%.
- VAT Flat Rate Scheme restricted for low cost traders- see here.
From April 2018
- Class 2 NICs abolished.
- Rate of Class 4 NICs (main NICs paid by self-employed) increased from 9% to 10%.
- Tax-free dividend allowance reduced from £5,000 to £2,000.
- Making Tax Digital (MTD)* begins for sole traders, partners and landlords with turnover over the VAT threshold (currently £83k).
From April 2019
- Rate of Class 4 NICs increases to 11%.
- MTD begins for remaining sole traders, partners and landlords (excluding those with turnover below £10k) and for VAT.
From April 2020
- Corporation Tax rate reduced to 17%.
- MTD begins for companies.
*MTD is the government’s plan to make all businesses keep their records digitally and to send updates to HMRC digitally each quarter.
If you would like some assistance or have any questions on the above or any other areas of accounting or tax, please contact us at firstname.lastname@example.org
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