I have just returned from a 2 week holiday and decided that there are benefits in going away over Budget day as I didn’t have to spend time protesting the class 4 rise on the self employed. But rightly so it’s been reversed. The differences between employment and self employment are vast but unfortunately recent publicity has lumped all the genuinely self employed individuals who have to seek new clients and work day by day into the same boat as Uber drivers and the like.
The reduction in the dividend allowance from £5,000 to £2,000 from 6 April 2018 was disappointing. This is of course aimed at director shareholders and is intended to reduce the attractiveness of operating through a company. The change will need to be factored into shareholders’ income extraction plans although we can also factor in the reduction in corporation tax from 6 April 2017 to 19% so that will help. I expect that there will be plenty of mileage in playing around with dividend bands and rates in future Budgets.
In a move welcomed in the accounting profession, there will be a 12 month delay in the Making Tax Digital (MTD) timeline for unincorporated businesses turning over more than £10,000 up to the VAT threshold to start filing online from April 2018. MTD will essentially require any business/rental property with a turnover of over £10,000 to report their profits even quarter and then do a final summary after year end replacing the current annual return system. I have been reluctant to speak to clients about this as the details are very uncertain and there is much lobbying over the ability of HMRC to implement this and the size of businesses it is aiming at. Great doubts/missgivings have been expressed by the Treasury Select Committee and the House of Lords. Thus we have until April 2019 before this potentially comes into play for self employed clients below the VAT threshold, so I will keep clients posted as and when. For self employed clients above the VAT threshold we will need to look at the requirements of MTD along with the quarterly VAT return from April 2018.
If clients have any questions please do not hesitate to contact me.