Personal tax implications are as follows:
· Tax-free allowance on share dividends to reduce from £5,000 to £2,000
· Personal tax-free allowance to rise to £11,500 this year (from £11,000), then slowly up to £12,500 by 2020.
· The higher rate tax bracket will rise from £43,000 to £45,000.
· A new £1000 allowance against property income and the same for trading income will be introduced from 6th April 2017.
· Class 4 National Insurance contributions for the self-employed to increase from 9% to 10% in April 2018 and 11% in April 2019.
· Class 2 National Insurance, currently applicable once self-employed people make a profit of over £5,965 a year, will be scrapped in April 2018.
· The above will cost the average self-employed person around £240 extra per year, although those earning below £16,250 will end up paying less.
· Employed people will not experience any change to their National Insurance contributions and nor will the employers.
A useful budget calculator tool to see how you will be affected can be found on http://www.bbc.co.uk/news/business-17442946
Another important change to note is that Corporation tax is being reduced to 19% from 6th April 2017, with the goal of reaching 17% by 2020.
If you would like to discuss this further or to discuss your accounting needs for 2017/18 please feel free to get in touch with our friendly team on 01275 873948 or by using our contact form.