Self-Assessment.......why do it yourself?
National Insurance U-Turn
So, the NIC U-Turn came after pressure from all sides on Philip Hammond. However, the money has to come from somewhere so I'm not sure we should be breathing a sigh of relief just yet.
For now, it's a case of 'watch this space'
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Budget 2017 - National Insurance Contributions
From April 2018, the class 4 national insurance rate will rise from 9% to 10%, and then from 10% to 11% in April 2019.
Class 4 contributions are paid on profits above £8060 (current lower level earnings rate). So, if you make profits as a self-employed person of £20,000, you will pay an additional £119.40 national insurance. If your profit is £40,000, you will pay an additional £319.40.
However, the class 2 national insurance contributions are due to be abolished, saving you £145.
So, whether you will be worse off or not will depend on how much profit you are making.
Remember, the class 4 contributions are based on your profits, after you have deducted your costs, not the amount of income or turnover you have.
Budget 2017 - Dividend allowance reduction
The £5,000 dividend allowance, introduced in April 2016, is due to be cut right back to just £2,000 from April 2018.
If you run your own limited company and take money out through dividends, then you will have to pay an additional £225 in tax in the 2018/19 tax year and thereafter.
Making Tax Digital
HMRC plans to introduce changes to the way businesses tell them about their earnings and tax returns. Making Tax Digital is HMRC's new initiative to collect data more frequently and ensure the correct tax is collected.
The scheme will be piloted from April 2017 and will become mandatory for some businesses from April 2018.
Make sure you're not taken by surprise when the changes happen.
More information can be found here: making-tax-digital.pdf
Changes to Employment Allowance
From 6th April 2016, limited companies with only one director and no other employees (or where all other employees are paid below the secondary threshold for class 1 national insurance - £156 per week) are no longer allowed to claim employment allowance.
This change only applies to limited companies so you won't be affected if you're a sole trader.
Follow this link to the GOV website for more information: Employment-allowance-further-employer-guidance
Savings and Dividends
Changes from April 2016 mean that savings and dividends are no longer taxed at source or attract tax credits. There is now a personal savings allowance of £1,000 and a dividend allowance of £5,000.
This means you may need to complete a self assessment and pay tax on the money you earn from savings and dividends.
Go to HMRC for more details.
Input VAT on the Flat
Did you know? If you’re on the Flat rate VAT scheme, you can still claim input VAT when purchasing capital expenditure goods if the purchase is:
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