The thresholds at which people pay National Insurance have not risen as significantly so employees and sole traders can still expect to pay National Insurance even if there is no tax to pay.  Contributions start after earnings exceed £162 per week £8,424 per annum which is the amount many directors will pay themselves from 6 April 2018.
 
Class 2 National Insurance (£2.95 per week) continues to be collected as part of the Self Assessment process and will be abolished from 6th April 2019 – not 2018 as originally announced to allow further time to design the new process.
 
The reduction in the nil rate band for dividends to £2,000 (currently £5,000) will be implemented from 6th April 2018.  This will result in a tax charge of an additional £225 per annum for owner managers of small companies.

Not surprisingly it will be frozen at £85,000 for the next 2 years whilst a consultation takes place on what the threshold should really be. 

The current deregistration threshold is £83,000 and will continue to be the case.  Digital taxation for businesses which are VAT registered and trading above the threshold will be implemented as planned in April 2019.

​The changes are as follows:

• Increase the living wage from £7.50 to £7.83 per hour

• increase the rate for 21 to 24 year olds from £7.05 to £7.38 per hour
• increase the rate for 18 to 20 year olds from £5.60 to £5.90 per hour
• increase the rate for 16 to 17 year olds from £4.05 to £4.20 per hour
• increase the rate for apprentices from £3.50 to £3.70 per hour 

 
It is important you review all employees on the payroll to ensure you are compliant.  With the new ‘RTI’ payroll reporting in place it would be very easy for HMRC to spot non-compliant employers and indeed a number of businesses have already been fined, named and shamed.
 
The Chancellor also announced that there will be no benefit in kind for people who charge their electric cars at work and at the same time has made some changes to the taxation of company diesel cars.  He was clear to state this excludes vans.  The cash equivalent where a van is made available to an employee for private use will increase to £3,350 for 2018/19 with the fuel benefit set at £633.
 
The employment allowance continues at £3,000 and it is vital if you are a single director company that you do not claim this (even if HMRC basic tools or your software allows it) as HMRC are now carrying out compliance checks in this area and are set to collect underpaid National insurance.

​Recently I’ve been prompted to compose a blog post about the service I provide to the County. To say that I was prompted is an understatement. I was press ganged into writing this by two regular clients who you’ll hear from later. So… let’s do this then…

• Confirming the point at which people pay tax (National Insurance has lower thresholds which are unchanged) from 6 April 2016 rises to £11,000
• Further reducing Corporation Tax to 17% by 2020
• Confirming marriage allowance at £1,100 for 2016/17
• Increasing the ISA limit to £20,000 per annum from 6 April 2017
• Implementing a new Lifetime ISA with a 25% government backed bonus for adults under 40 who save upto £4,000 per annum
• Confirming the Annual Investment Allowance is now permanently £200,000
• The scrapping of Class 2 National Insurance (currently £2.80 per week) 6 April 2018
• Scrapping this year's planned fuel duty increase which should help keep costs down!
• Reducing Capital Gains Tax to 10% for basic rate tax payers and 20% for higher rate tax payers - this does not apply to residential property

I will be uploading a new digital version of my 2016/17 tax card to my refreshed website by 17.00 tomorrow, so you're welcome to download it to your device.  In the meantime the new tax pages feature business and personal tax rates for 2016/17.  Alternatively the tried and tested hard copies will be available later this week!

As always, this newsletter is designed to draw attention to specific topical issues and is in no way intended to provide advice tailored to your business - advice must always be sought before acting on any item featured.

Best wishes
Nigel

In recent months more and more clients have bought a second property as an investment and are considering more properties.  As a reminder when you let property it needs to go onto your Self Assessment tax return even if you make a loss, as HMRC are getting pretty skilled at spotting let properties!  This also applies to making sure you complete the Capital Gains Section of your tax return when you come to sell it!

There have been subtle changes in the way let properties are taxed over recent years and more are to come:

• Unfurnished Properties - The renewals basis for things like white goods was abolished 6 April 2013 for unfurnished property leaving landlords with no relief against expenditure on things like fridges and cookers (unless built in) - ironically they could be rented and this would be allowable!

• Furnished Properties (remember these properties need to be ready to move into - not just a table and a bed!) - Landlords currently enjoy a 10% wear and tear allowance on rents received. This will be abolished from 6 April 2016 and landlords will only be allowed to claim the actual amount of any items replaced

​

• All properties - at present full tax relief is available for interest on a loan used to fund a property or improvements.  From April 2017, tax relief on property loans (including mortgages on single properties) will be restricted so that by 2020, interest will not be an allowable expense but it will receive tax relief at 20%.  For those people paying 40% with high mortgages some careful planning will be required

• Rent a room - good news here this rises to £7,500 from April 2016

For more information or to see how this may affect you or your business, contact me for details