2017 Budget Review

Following on from the Chancellor’s first and last Spring Budget, we are pleased to provide you with our summary of the key announcements, along with our tax tables for the 2017/18 tax year:

Budget Summary

Tax Data
The main changes include:

  • The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018.
  • Class 4 national insurance contributions for self-employed workers will increase to 10% in April 2018 and rise again, to 11%, from April 2019.
  • Unincorporated businesses and landlords with a turnover below the VAT threshold will have until April 2019 before they are required to implement ‘Making Tax Digital’.

Among the key changes to note for this year are:

  • The Chancellor confirmed that corporation tax will be cut to a rate of 19% from April 2017 and it will be further reduced to 17% in 2020.
  • The personal allowance will rise to £11,500 in April 2017 and to £12,500 by 2020 and the higher rate income threshold will rise to £45,000, although special rules will apply in Scotland.
  • Individual landlords’ tax relief for finance costs will be restricted to basic rate tax – to be phased in over four years from April 2017.

More information on the Budget is available on our website or if you would like to speak to one of our team please contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

New Tax Year – New Rules!

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So, the 6th of April brings in the new tax year with new rules, but what are the changes?

  • Personal Allowance – increases to £11,000.
  • Personal Savings Allowance – if you are in the 20% band for income tax, you will pay no tax on the first £1,000 of interest you get from savings. If you are a 40% taxpayer, you are allowed to earn £500 of interest tax-free ,rather than £1,000.
  • ISA limits
    • ISA – £15,240
    • Junior Isa limit- £4,080
    • Child trust fund limit- £4,080
  • National living wage – 25 and overs are now entitled to a minimum pay of £7.20 per hour.
  • Dividend Allowance – The first £5,000 you receive in dividends is tax free. Above £5,000, basic-rate taxpayers will pay 7.5% tax, higher-rate taxpayers 32.5%, and additional rate taxpayers 38.1%.
  • Employment Allowance – The new amount of £3,000 can be reclaimed against employers NI.
  • Tax on Loans to Directors -The 25% tax charge on loans to directors, etc. increases to 32.5%.
  • Capital Gains Tax – The higher rate of capital gains tax is reducing from 28% to 20% and the basic rate from 18% to 10%. However, the new rates will not apply to residential property that does not qualify for private residence relief.
  • Vat Registration – The thresholds increase to £83,000 for registration and £81,000 for deregistration.
  • Landlords and Second-home Owners – Will have to pay an extra 3% in stamp duty for second properties bought after 1 April 2016. This is on top of the normal rates (0% on the first £125,000; 2% for £125,001 to 250,000; 5% for £250,001 to £925,000; 10% for £925,001 to £1.5m, and 12% above £1.5m).

If you have any questions regarding the changes, please do not hesitate to contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of gubgib at FreeDigitalPhotos.net

Ed Gooderham’s thoughts on the Budget

Ed Gooderham, partner at Green & Co, tweeted along live with George Osborne’s Budget announcements. Catch up with his thoughts here…

If you have any questions on any of the above or about the Budget in general, please don’t hesitate to contact us on 01633 871122

Dividends – What Isn’t Changing?

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The way they are taxed may be changing, but the other rules and procedures surrounding dividend payments have not. Here is a brief re-cap of the key actions and considerations to bear in mind when making dividend payments:

  • There must be distributable reserves in the business that cover the dividend payments. This is company law and must be adhered to. The distributable profits cannot be ascertained simply by checking the financial statements and the Companies Act outlines the necessary adjustments to accounting profit and defines distributable profits.
  • The dividend must be declared. Typically this should be done at a meeting held by the directors, but private companies are able to pass an ordinary resolution in writing. Further procedures for declaring dividends may be set out in the company’s Articles of Association.
  • Dividend vouchers should be drawn up for every dividend voted containing all the necessary entries. A single voucher can be produced which covers a tax year and it is now possible to produce electronic vouchers. Again, the Articles of Association should be adhered to if any procedures are outlined within them.
  • The date of the dividend is important, especially as the taxation is changing. Whether the dividend is final or interim will affect the date of payment and again, the company’s Articles may outline any applicable procedures.

Best practice concerning dividend payments is paramount as, in the event of an enquiry, HMRC can challenge the tax status of payments made.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

 

Ways To Save Tax Ahead Of The 5 April Year End

UntitledThe end of the tax year of 5 April is fast approaching, and this is always a good time of year to think about ways to structure your business and personal finances so that they are as tax-efficient as possible. With new rates and various legislative changes due in the 2016/17 year, here are some of the planning strategies you may wish to consider.

Click here to read our ways to save tax ahead of the 5 April year end.

 

 

Green & Co Feature In Torfaen Business Voice

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Read Green & Co’s article on the important changes to the affect dividends from April 2016, featuring in this month Torfaen Business Voice February edition.

Last year the budget brought with it unwelcome news for directors of private limited companies who extract most of their income via dividends. The Government is abolishing the dividend tax credit as we know it, and introducing a new dividend taxation system.
If you haven’t already done so, now is the time to sit up and take notice. From April 2016, the current rules on grossing up your net dividend (the amount you receive) by 9/10 will cease.

Click here to read the full article in the Torfaen Business Voice February 2016.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of mrpuen at FreeDigitalPhotos.net

New Tax Year – New Dividend Rules…

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From 5 April 2016 the taxation of Dividends is changing and this is likely to significantly increase the tax that you have to pay. The good news is that you do not have to pay tax on the first £5,000 of your dividend income, no matter what other income you have.

However the tax you pay on dividends over £5,000 is increasing by 7.5% and will be at the following rates:

  • 7.5% on dividends within the basic rate band
  • 32.5% on dividends within the higher rate band
  • 38.1% on dividends within the additional rate band

If you would like to discuss the changes and its implications to the way you draw dividends, please get in touch with our tax department.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of mrpuen at FreeDigitalPhotos.net

Winter 2015 Newsletter

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With winter fast approaching, take the weight off your feet and chill as we bring you up to date on everything you need to know this season!

Green & Co Winter 2015 Newsletter

This edition focuses on:

  • Property Tax Relief: Winners And Losers
  • All Change For Dividends
  • Pension Allowances: The Next Steps
  • Tax Round Up
  • Tax Tip
  • Reminders For Your Winter Diary

Image courtesy of Ohmmy3d at FreeDigitalPhotos.net