The Chancellor’s March 2016 Budget brought some expected changes and, perhaps, some surpise changes to our tax system. The sugar levy on drinks companies is being fiercely debated in the Press and we can only wait to see if something good will come from it. Personally, I believe that any influence on the high levels of sugar consumed, mostly unwittingly, by our population is a good thing. It will be a very good result if he can use the tax raised from that levy to fund extra hours for schools to be able to provide extra curricular activities for their pupils, including sport.
A major change to Inheritance Tax (IHT) is being phased in from 6 April 2017. The additional Inheritance Tax Residence Nil Rate Band (RNRB) starts being phased in to enable individuals to pass on their family home to direct descendants. The additional nil rate band starts at £100,000 and rises to £175,000 for deaths after 6 April 2020.
In the Summer Budget Newsletter we outlined the dramatic new rules for taxing dividends that will apply from 6 April 2016.
As previously reported, there will be no 10% credit against the tax on dividends. Dividends above the £5,000 will be taxed at 7.5% if they fall into the basic rate of tax, 32.5% if they are at higher rates and 38.1% for dividend income falling into the additional tax rate. Currently dividends falling into the basic rate band are effectively tax free.
If your company is located in one of the 24 or so enterprise zones, there are significant Government incentives to encourage investment. HMRC have added maps to their online guidance, showing sites within enterprise zones that offer 100% first-year allowances for companies investing in new plant or machinery until 31 March 2020.
According to the Government website, businesses basing themselves on Enterprise Zones can access a number of benefits:
The Employment Allowance is increasing from £2,000 to £3,000 on the 6th April 2016. This is good news for employers, but bad news if you’re the only employee in a company, and also the director, as your company will no longer be eligible for the NICs Employment Allowance.
This means that if as a sole director you pay yourself £11,000 per year to make use of the personal allowance, then the company will pay just under £400 per year in Employer’s National Insurance.
Following the consultation last summer, the draft Finance Bill 2016 includes the legislation to reintroduce tax relief for the replacement of furnishings in buy to let properties from 6 April 2016.
This will apply to both furnished and unfurnished lettings and will mean that the cost of replacing items such as cookers and washing machines will again qualify for relief following the withdrawal of a concession from 6 April 2013.
Self Assessment tax bills are due to be paid on the 31st January. These payments are either the balancing payment of tax for the tax year 2014/15, a payment on account towards your 2015/16 tax bill, or possibly both.
It should be noted that the 31st January in 2016 is on a Sunday, and therefore payment should be made on or before Friday 29th January.
As we are rapidly approaching the festive period, businesses getting into the spirit of things often ask what they can and can’t claim for tax purposes.
Here is a quick reminder of how to treat your festive finances:
Gifts to Employees
To all you generous employers out there, here are a few guidelines to employee gifts:
On the 1st July HMRC won their ongoing battle to prove that their new scheme was lawful. Unfortunately, due to the legal proceedings, the launch of Tax-Free Childcare (TFC) has been postponed until early 2017. This means that the existing employer schemes/childcare vouchers will remain the same until then.
The government will be launching (although no date given) a calculator so that families can work out which scheme will be the most beneficial for their circumstances.