Thursday 9 March 2017

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Howard Owen
5 years ago
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1 Thursday 9 March 2017

2 Jennifer Williamson BSc (Hons) ACA Accounts, Tax and Outsourcing Partner

3 Corporation tax Year 2010/ / / /21 Main rate of Corporation tax Example Profits of 500,000 28% 20% 19% 17% Year 2010/ / / /21 Corporation tax 122, ,000 95,000 85,000 3

4 Employers National living wage 7.50 from April 3,000 employment allowance continues Apprenticeship Levy from 1 April 0.5% charge on employers payroll Kicks in on payrolls over 3 million 4

5 Levelling the playing field? Increase in Class 4 NI contributions Earnings* 2016/ / /20 Below 8,060 0% 0% 0% 8,060-43,000 9% 10% 11% Over 43,000 2% 2% 2% * 16/17 tax bands shown Class 2 NIC scrapped from 5 April 2018 Dividend Allowance reduces from 5,000 to 2,000 from 5 April

6 Example Profits of 100, /17 Employee Self employed Company shareholder / director Employee Class 1 NIC 5,333 Class 4 NIC 4,285 Class 2 NIC 146 Income tax 29,200 29,200 14,570 Corp tax 18,400 34,533 33,631 32,970

7 Example Profits of 100, /20 Employee Self employed Company shareholder / director Employee Class 1 NIC 5,333 Class 4 NIC 4,983 Class 2 NIC - Income tax 29,200 29,200 15,094 Corp tax 17,480 34,533 34,183 32,574 Class 1 NIC 12,

8 Levelling the playing field Harder to get capital gains tax treatment Increased penalties for borrowing money from your company Personal service companies assessed to PAYE 8

9 Business rates Small Business Rate Relief from 1 April 2017: 100% for rateable value < 12,000 Tapered relief where rateable value between 12,000-15,000 However, revaluation from 1 April 2017 Cap on rates increase for businesses losing small business rate relief Local authorities fund to provide targeted relief 9

10 Timing is everything AIA Main rate Special rate Capital Allowances 200,000 p.a. 18% 8% Limitless 100% relief for environmentally beneficial plant & machinery Applies to all businesses 10

11 Is your (new) car green? Don t forget tax relief based on CO2 emissions - From April 18 Emission Tax relief Full relief after 75g/km 100% 1 year g/km 18% WDA 15 years Over 130g/km 8% WDA 31 years From 1 April 17 additional first year RFL levy on new vehicles Leased Cars 130g/km no restriction > 130g/km 15% restriction 11

12 Is your (new) car green? Don t forget tax relief based on CO2 emissions - From April 18 Emission Tax relief Full relief after 50g/km 100%(*) 1 year g/km 18% WDA 15 years Over 110g/km 8% WDA 31 years From 1 April 17 additional first year RFL levy on new vehicles Leased Cars 110g/km no restriction > 110g/km 15% restriction 12

13 Research & development SME Current relief 230% Repayable credit 14.5% Only available to companies No minimum spend Patent Box reduced rate of tax on profits from Patent 13

14 Pit stop round up Corporation tax rates reducing Capital allowances as you were, except on cars Check your state pension entitlement Window of opportunity to review your business rates position Review your business structure 14

15 Clive Relf FCA Private Client Tax Partner 15

16 Personal tax - agenda Nuts and bolts Further buy-to-let change Two new tax free allowances Impact of dividend tax changes Inheritance tax changes New tax free childcare Pensions Savings update Making tax digital Pit stop roundup

17 Nuts and bolts Income tax 2016/ / /21 Tax free amount 11,000 11,500 12,500 Basic rate band 32,000 33,500 37,500 Rates 20%, 40%, 45% 20%, 40%, 45%? Capital gains tax 2016/ / /21 Exemption 11,100 11,300? Rates 10%* & 20%* 10%* & 20%*? *both subject to 8% surcharge on gains arising from residential properties

18 Residential property buy-to-lets Tax relief restriction on finance costs for landlords Gradual abatement from April 2017 Impacts higher rate taxpayers only Relief changes from a deduction against income to a basic rate tax reduction Time to sell up? Your level of gearing could make that decision for you

19 Residential property an interest example X, a higher rate taxpayer, has net rental income of 10,000 before deducting 4,000 of interest costs. During 2016/17 he s taxed at 40% on 6,000 profits, with a tax bill of 2,400. In future: Tax year ended Tax bill April ,600 April ,800 April ,000 April ,200

20 Two new tax free allowances Both coming in April 2017 Property 1,000 p.a. Most valuable for those with no relevant expenditure otherwise not pain free Trading 1,000 p.a. To cover sundry bits and bobs again those with minimal expenditure will benefit most

21 Further changes to dividend taxation 5,000 p.a dividend allowance available since April 2016 Historic tax credit removed Allowance falling to 2,000 p.a in April 2018 Taxpayer basic 7.5% higher 32.5% additional 38.1% Effective rate

22 Dividend tax example (1) Mr Jackman, a 40% taxpayer has a salary of 65,000 and receives a dividend of 10,000. The tax on this dividend would be; Today From April 2018 Tax liability 1,625 2,600 Tax increase of 975 come 2018

23 Dividend tax example (2) Mrs Wilson is a basic rate taxpayer with a pension of 12,000 and dividend income of 10,000. The tax on this dividend would be; Today After April 2018 Tax liability Tax increase of 225 come 2018

24 Inheritance tax (IHT) Nil rate band of 325,000 remains frozen until April 2021 Unchanged since April 2009 and IHT take now at all time high! Rate remains at 40% New residence nil rate band introduced from April 2017 but not for everyone

25 New residence nil rate band Impacts deaths after 5 April 2017 Initially worth an extra 100,000 tax free per individual in certain circumstances Gradually increases to extra 175,000 tax free over period to April 2021 Don t qualify if estate on death exceeds 2 million

26 New nil rate band The small print Only available where deceased leaves their home (or cash from earlier sale) to close descendent So son, granddaughter okay but not niece, cousin or parent Also not available where property left to a trust!! New relief is complex so caveat emptor 26

27 New tax free childcare First announced in 2013 and being phased in (at last) from April 2017 Operates online and worth up to 2,000 p.a for each child under 12 years of age Government contributes 20p for each 80p an individual spends on qualifying childcare Available to self employed for the first time Parents MUST be working Not available if either parent has income > 100,000 p.a

28 Pensions UNCHANGED Availability of tax free 25% of fund Tax relief available at marginal income tax rate Maximum annual premiums of 40,000 but restricted for HNWI Lifetime allowance remains at 1 million CHANGED Money purchase annual allowance falls to 4,000 from 10,000 (for some) New 25% tax charge (from today) on transfers to QROPs

29 Savings Lifetime ISA ISA allowance increasing from 15,240 p.a to 20,000 from April 2017 NEW lifetime ISA for those aged > 18 and < 40 Max saving of 4,000 p.a with Government addition at 25% Withdraw to buy first home OR leave alone until 60 years of age NS&I Bond New NS&I bond from April paying 2.2% gross but only on maximum of 3,000 3 year lock in.

30 Making tax digital HMRC s goal To reduce the 12 million SA tax returns submitted in 2015 to nil by 2020 The mechanics Introduction of quarterly reporting from April 2018 deferred to 2019 for those with gross incomes > 85,000 and exemption for those < 10,000 p.a. Things to do Access your personal tax account to familiarise yourself 30

31 The pound in your pocket Duty frozen for seventh year Excise duty uplifted by inflation New sugar tax from

32 Pit stop round up Review your will to ensure eligibility for new 100,000 IHT exemption Stress test your buy-to-let properties Dust off your pension pot and take advice Are you maxing your ISAs? Access your personal tax account 32

Tax Facts BRINGING TAX INTO FOCUS RATES AND ALLOWANCES GUIDE 2018 /

Tax Facts BRINGING TAX INTO FOCUS RATES AND ALLOWANCES GUIDE 2018 / Tax Facts RATES AND ALLOWANCES GUIDE 2018 / 2019 BRINGING TAX INTO FOCUS www.hazlewoods.co.uk CONTENTS PERSONAL TAX Page Income tax rates and allowances 1 Timetable for self-assessment 3 Pensions 3 Capital