My video on the 2017 budget can be found here:
The budget was one of the shortest and simplest in recent times. There were two significant tax changes:
- 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.
- 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.
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.