BUDGET UPDATE – 8 MARCH 2017
The following is a brief summary of the, fairly uneventful, 2017 budget:
NATIONAL INSURANCE CONTRIBUTION (NIC) CHANGES
The Government has announced plans to close the gap between National Insurance Contributions (NIC) paid by Employees, Self Employed individuals and those employed via their own limited company.
Whilst they continue to stick by the decision to eradicate Class 2 National Insurance for Self Employed individuals, in April 2018, they will increase Class 4 NIC from the same date. The proposal is currently to increase Class 4 NIC by 1% (taking it from 9% to 10%) with effect from 6 April 2018 and then a further increase of 1% (making it 11%) with effect from 6 April 2019.
NIC Update 17 March 2017: The Government have announced a U-turn on their intention to increase National Insurance and have confirmed the increases announced in the budget of 8 March 2017, will not take effect.
TAX FREE DIVIDEND ALLOWANCE
Taxpayers will see the reduction in the Dividend Allowance which was introduced in April 2016. It is proposed that this will reduce from £5,000 per year to £2,000 per year with effect from April 2018. Whilst this was clearly aimed at owner managed companies, it will impact all with substantial share portfolios.
MAKING TAX DIGITAL
As mentioned above, the government will provide an extra year (until April 2019) before Making Tax Digital is made mandatory for landlords and Self Employed individuals with turnover below the VAT threshold (currently £83,000).
The government continues to introduce more legislation to make Tax Avoidance difficult. They propose introducing legislation which will prohibit the ability of businesses to convert capital losses into trading losses from 8 March 2017 as well as introducing and tightening existing rules which prohibit promoters of schemes and penalise any promoters of schemes which are later defeated by HMRC.
PLEASE NOTE THAT THIS IS FOR GENERAL REFERENCE ONLY AND SHOULD NOT BE ACTED UPON WITHOUT ADVICE, IT IS NOT AN ADVICE NOTE AND THEREFORE YOU SHOULD TAKE ADVICE SPECIFIC TO YOUR OWN TAX SITUATION.