Another quarter, another budget.
This year, along with another expected round of cuts, Osbourne has announced a few things which may be of interest to our clients.
First off was a significant cut in Rates, although unfortunately our initial reaction is that this probably won’t extend to Northern Ireland as Rates are set by Stormont.
Likewise, the Corporation tax changes will affect our mainland UK clients and should act to mitigate the impact of the 7.5% increase in Dividend tax rates. For our Northern Ireland clients this of course will have no impact due to already announced plans for Stormont to drop our local corporation tax rate to 12.5% in 2018. All in all though this does mean that most clients should expect to face higher than usual tax bill in 2016/17 due to the governments bringing forward increases in dividend tax now while delaying cuts to corporation tax until the next year.
Another announcements of attacks on “personal service companies” who fall under IR35 was announced, although it remains to be seen whether this will amount to anything substantial – so far HMRC’s efforts to enforce IR35 have been slow and completely dwarfed by the sheer number of limited companies which potentially fall under it. Investigations so far have been very slow and entirely random with most accountants announcing that none of their clients have faced an inspection so far.
On a personal tax note, the news announced was the usual increase to the tax thresholds in line with inflation. Bigger news is the big cut to Capital Gains tax for people who pay tax within the basic rate band – which should be very good news for anyone with a small level of income owning buy to let property.
Finally, on a minor note the government are expanding ISAs again (they made it £15,000 in 2014 now it’s up to £20,000 maximum deposits per year), but in the present day and with interest rates as low as they are, ISAs remain a relatively unattractive way of investing and saving for the future.
As always, anyone wanting to discuss the impact of any of these changes are free to drop either of us an email.
Full changes can be found here, we’ll update with any news on other aspects of it (it’s standard practice for chancellors to hide the really bad news in the small print somewhere near the back of a 300 page document so it takes a few days for people to dig through and uncover these).