FINANCE
Hear it from the experts …
Important changes to the tax system
Corporation Tax The Corporation Tax rate drops from 20 % to 19 % on 1st April 2017 ( and to 17 % on 1st April 2020 ). This means that Companies will pay a bit less Corporation Tax going forward !
Dividend Tax – the bad news The impact of the dividend tax ( an extra 7.5 % on dividends received in excess of £ 5,000 ) will more than cover any saving from a reduction in Corporation Tax . The big news in January 2018 will be the shock many taxpayers will receive when they see how much tax they have to pay . For example , a woman who receives £ 20,000 in dividends , from shares she holds in the Company her husband runs , may not be used to having any tax to pay . But she will now have to :
a ) Submit a 2017 Self-Assessment Tax Return
and
b ) Have to pay tax in January 2018 of £ 1,125 plus Payments On Account ( see our video on payments on account )
If her husband receives a similar amount of dividends , his tax bill will be higher by the same amount .
National Minimum Wage On 1st April 2017 , the National Minimum Wage , for over people aged 25 and over , increases to £ 7.50 / hour . For a 37.5 hour week , this equates to £ 281.25 / week or £ 14,625.00 / year .
Mortgage Interest on Buy-to-let properties
The first stage in restricting higher rate tax relief on mortgage interest begins on 6th April 2017 . For the 2017 / 18 tax year , three quarters of the mortgage interest obtains tax relief ; and one quarter is used to calculate a tax reduction at 20 %. This sounds complicated – and it is .
Peter Bromiley ACA Partner
I want my Company to pay the Golf Club membership for my staff as a gift . Can I provide it as a benefit ? I understand it ’ s allowable even for Directors . Are there consequences ?
Your Company could pay the membership – and it would obtain tax relief , and reduce your Corporation Tax bill . But , it would be a taxable Benefit in Kind ( BIK ) for you and your staff . The BIK would have to be divided in a fair way – perhaps the number of times anyone uses the club ? You would all have to pay extra income tax – and your Company would have to pay extra N . l .
If you take customers to the Club , it could reduce the taxable BIK � because some of the cost would count as entertainment ( which is itself not tax deductible ). Basically , either way there is tax payable , I suggest you simply do what is true .
Peter Bromiley ACA
www . ask-ams . co . uk @ AMSAccountancy
Ask AMS Advice for small businesses AMS Accountancy Ltd . 01793 818400
www . ams-accountancy . co . uk
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10 THE BUSINESS EXCHANGE 2017