Making Tax Digital (MTD) for business?
Q. Who will benefit from the deferral on MTD?
A. If you are under the current VAT threshold of £83,000 the deferral until April 2019 will give sole traders, small unincoroprated businesses and landlords, a further year to prepare.
All other unincorporated businesses and landlords with gross income (turnover) above the VAT threshold will be required to comply with the quarterly reporting for MTD from April 2018.
Dividends
Q. How will the change in the tax free dividend allowance affect tax payers?
A. Company owners who pay themselves in the form of dividends rather than salary will see their tax-free allowance more than halved from £5,000 to £2,000.
The change also affects those investors with portfolios of shares held outside ISAs or pensions. The reduction in allowance will come into effect in April 2018.
National Insurance Contributions (NIC)
Q. Will the changes in NIC affect me?
A. For those who are employed there is no change.
For the self employed , including sole traders, partnerships and LLPs, from 6th April 2018 there will be a 1% increase on their profits above £8,164, up to a maximum of £45,000, and a further 1% increase on 6th April 2019. The maximum impact in April 2019 could equate to £736.72 per annum.
However, the Class 2 NIC contribution of £2.80 per week is being abolished, which will partially offset this increase.
These questions and answers are raised and addressed as a result of today's budget. Moore (South) LLP Tax Team continue to work on the more detailed aspects of tax legislation, to ensure the best outcomes for our clients.
If you have any questions following today's announcements contact your local office to speak to your south tax team representative, who will be on hand to help.