The point at which people will pay income tax rises to £11,000 for 2016/17 which is some £400 higher than the current year. This increases to £11,500 from 2017/18. The Chancellor has continued to increase thresholds for those on the higher rate tax and the point at which higher rate tax will be paid from 6 April 2016 will be £43,000 and £45,000 from 6 April 2017. The thresholds at which people pay National Insurance have not risen as with employers National Insurance kicking in at £156 per week. This is very similar for those who are self employed with the point at which the 9% class 4 contributions become due being £8,060.
A new dividend tax commences 6 April and this was the subject of a detailed newsletter a few months ago. The first £5,000 is tax free and any dividends above this are taxed at an additional 7.5%. Planning around tax year end and declaring dividends properly and 'not just taking drawings' is critical as this is likely to be an area where HMRC are aggressive. He also took the opportunity to close the final 'loophole' to manage dividend income by increasing tax on 'directors' loans to 32.5%.
A new dividend tax commences 6 April and this was the subject of a detailed newsletter a few months ago. The first £5,000 is tax free and any dividends above this are taxed at an additional 7.5%. Planning around tax year end and declaring dividends properly and 'not just taking drawings' is critical as this is likely to be an area where HMRC are aggressive. He also took the opportunity to close the final 'loophole' to manage dividend income by increasing tax on 'directors' loans to 32.5%.
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