While the budget has been all over news and social media, the changes that grab the headlines are rarely the ones that really affect us in our day to day lives and are often skewed by political views. We have condensed the 68-page budget into a few brief points that could potentially have an impact on you and your business:
Dividend allowance reduced from £5,000 to £2,000
Individuals currently have £5,000 of tax free dividend income on top of their personal allowance but this is going to be reduced to £2,000 from April 2018. This will make it less tax efficient to extract funds from your limited company through dividends and result
Corporation tax is still due to drop to 17% by 2020
There were no changes to the plans already in place to drop corporation tax to 19% from April and then 17% from April 2020. This is the one silver lining gives a little relief to the array of changes over the past two years that have made operating a small business less tax efficient.
Self-employed NIC to increase by 2%
Self-employed workers with profits between £8,060 and £43,000 currently pay 9% class 4 NI on those profits. This rate will increase to 10% from April 2018 and again to 11% from April 2019. This change has got much of the budget media coverage but in reality, most experts believe this change will equate to around 60p a week for the average self-employed person.
MTD postponed for unincorporated businesses under the VAT threshold
Unincorporated businesses with turnover less than £83,000 were due to comply with the governments making tax digital initiative by April 2018 but this has been postponed to April 2019 to give businesses more time to prepare.
If you’d like a more in depth analysis of the budget or a full tax rate guide you can download the following PDFs for free: