The Government has in recent years increased the amount of tax raised by targeting certain sectors.
Landlords have been particularly hit in recent years with restrictions on loan interest relief and certain expenses not being able to be offset against rental income. The extra 3% on Stamp Duty Land Tax on buying an additional property has hit landlords as well as those wishing to by a holiday home.
The changes to the taxation of dividends has increased the tax payable by individuals who operate through their own limited company. Measures previously introduced mean that such individuals are typically more than £2,000 worse off for the 2016/2017 tax year. Measures announced in today’s Budget appears to target these individuals further. From April 2018 the tax free dividend allowance reduces from £5,000 to £2,000 meaning that individuals who operate via their own limited company will pay more tax on the dividends they pay themselves from their company.
The Chancellor also targeted the self employed. From April 2018 self employed workers will see a 1% increase in NIC to 10%. This will apply to profits over about £8,000 to the higher rate threshold. The rate will increase by a further 1% to 11% in April 2019. It is estimated that more than two million people will be impacted by this announcement.
Furthermore, there is a review taking place into the different employment statuses. There is a concern that people appear to be choosing their employment status driven primarily by differences in tax treatment.
If you wish to discuss this in further detail please contact Brian King on 024 7622 1046 or e-mail firstname.lastname@example.org