Budget 2017

My video on the 2017 budget can be found here:

https://youtu.be/qKYCBELWdt0

The budget was one of the shortest and simplest in recent times.  There were two significant tax changes:

  1. The tax free amount of dividends goes down from £5,000 to £2,000, which might cost a married couple paying basic rate tax £450, from 2018/19.
  2. Class 4 National Insurance goes up from 9% in 2017/18 to 10% in 2018/19 and 11% thereafter.

The second of these is so controversial it might never happen.  While the changes this year are minor, there have been a host of recent changes.  I think it is worth reminding you what these are and when they come into effect.

Dividend Tax

Will the dividend tax cost you £3,000?

If you receive a basic salary and dividends to make your income up to £43,000, you will about £2,000 a year in dividend tax starting on 6/4/16.  You will pay £3,000 in January 2018 and £1,000 in July 2018 and then £1,000 every six months.

3% Stamp duty Surcharge

You pay the stamp duty surcharge if you or your partner already own a property and will keep it after the purchase of your new property, this is already in place.

Therefore if you have a let property or own a share in a family house then when you buy your main residence you will suffer the 3% surcharge on the purchase of your main (or any other) residential property.

Interest on Buy to let:  Phased out

Hire rate tax relief on interest will be phased out over 4 years from 6th April 2017.  Watch out, the mechanics way this is calculated matter.  All interest is disallowed and then relieved separately.

Flat rate VAT

If you are a low cost business your flat rate percentage will go up to 16.5% on 6/4/17 which will eliminate any profit you were making on VAT.

  • Not be VAT registered if your turnover is less than £81,000.
  • Keep your receipts and do ‘normal’ VAT
  • Take the higher flat rate percentage

Contractors under Supervision and Control

From 6/4/16 you cannot claim expenses for traveling that a normal employee could not claim.

 Research and Development Tax Credits

 If you do research and development you might benefit from tax refunds of up to a third of the cost incurred.

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