Cooper Curtis Accountants Comment & Guide to the March 2016 Budget

With the Budget taking place yesterday, there were a number of significant changes announced and confirmed coming in from April....

Some of these were expected, such as the Travel and Subsistence tax relief restriction for those employed via an employment intermediary. We expect the re-percussion of this will be a skills shortage for workers unwilling to travel. 

A surprising announcement was a drop in capital gains tax to 10% and 20%. This is the chancellor's move to encourage enterprise investments. But, this does not apply to residential properties or carried interest, which remain at the 18% & 28% tax rates. 

We knew the new dividend tax regime from April was going ahead so this comes as no surprise. We have been busy reviewing our clients' records over the past few weeks to seek out any tax saving opportunities. 

Read our Guide to the Budget Summary here

If you have any concerns about any of the announcements made in the recent Budget and would like a confidential chat to an advisor, please call 0845 303 1144 now or email info@coopercurtis.co.uk 

 

 

How will dividends be taxed from April 2016?

From April 2016, the way dividends are taxed is changing. 

The 10% notional tax credit is being scrapped and there is now a £5,000 dividend tax free allowance per tax year.

After that, the tax rates are 7.5% up to the basic rate band (£5K tax free allowance forms part of this), then 32% for higher rate and 38.1% for additional higher rate.

Note, the new 'savings allowance' from April is in addition to the dividend allowance but is not available to use against dividend income, only interest.

Putting this into context, if you take an employment income of £8,000 and take out company dividends of £40,000, this will mean you will pay around £1,390 more in tax than before.

Should you be taking any action? 

If you have enough reserves held in the company, consider whether it would be beneficial paying a large dividend before April 2016.

Consider changing your year end to March if you haven't already, this way you can keep track of the dividends you are taking and this will make it easier to tie in to the year end. 

You should speak with your advisor on possible ways to mitigate this tax before April. 

 

To discuss how the new dividend regime will affect your business or to find out more about our pro-active services, contact Brian or Caroline on 0845 303 1144 for a chat or email info@coopercurtis.co.uk

Cooper Curtis Accountants have offices in Warwickshire, Birmingham and Manchester

Knowledge - Support - Succeed

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.

 

 

Update on abolishment of tax relief on Travel & Subsistence via Employment Intermediaries

HMRC have now stopped accepting comments to the proposed removal of home to work travel and subsistence relief where an individual is engaged through a PSC or Umbrella Company and under Supervision, Direction or Control (SDC). Contracts which fall within IR35 will no longer be eligible to apply for tax relief for travel and subsistence on their ordinary commute.

Under proposed rules, HMRC will look at the extent to which SDC applies and whether in fact they should be on the payroll.

In our latest blog, we explore what HMRC means by 'Supervision,  Direction and Control'...

Supervision

Is there someone overseeing their work? And not only that they are doing it, but this is done to a certain standard?

Direction

Is someone making sure the work is done a certain way? Do they offer instruction, advice and guidance on how it should be done?

Control

Does someone dictate what work is done and how to go about doing it? Does someone have the power to move you on to a different task?

 

Any changes will be confirmed in the Autumn statement, and will come into effect from April 2016. If you are unsure whether you will be affected by these changes, we would recommend that you seek professional advice sooner rather than later. 

We would also recommend that you have PAYE investigation protection in place should HMRC open an enquiry into your tax and National Insurance affairs which will cover you for professional fees incurred whilst bringing the enquiry to a closure.

We can offer this from as little as a £5 per month offering you peace of mind. 

 

if you are unsure as to what the proposed changes will mean for you, please contact Brian or Caroline for further information on 0845 303 1144 or email info@coopercurtis.co.uk 

Knowledge - Support - Succeed

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.