This year’s Budget did not see many changes for personal tax – but shareholders are adversely affected.
The highlights are as follows.
- The tax free allowance on share dividends is being reduced from £5,000 to £2,000 from April 2018.
- The main rate of Class 4 National Insurance contributions for self employed is to rise from 9% to 10% in April 2018 with a further rise in April 2019 to 11%. This applies to earnings between £8,060 and £43,000. All Class 4 earnings over £43,000 will continue to be taxed at 2%.
- Class 2 National Insurance contribution (which is paid by self employed workers making a profit of more than £5,695 a year) is going to be scrapped as planned in April 2018.
- The personal tax free allowance will rise to £12,500 by 2020.
- There were no changes to National Insurance paid by employed workers or employers or to Income Tax or VAT.
- The capital gains annual allowance for 2016/17 is £11,100 and will rise to £11,300 in 2017/18. The Trustee allowance is half of this amount subject to the number of trusts created by the same Settlor.
- As mentioned in the 2016 Budget there will be a £1,000 trading and property income allowance which comes into force from 6 April 2017. This is subject to certain restrictions, but is aimed at primarily helping people who sell on ebay, or let their home once a year.
It has been announced by the Chancellor since the budget that the planned increases to self employed national insurance that were set out in the 2017 Budget will be abandoned. The Chancellor has confirmed there will be no increases to national insurance rates in this parliament. The abolition of Class 2 national insurance will go ahead from April 2018.
If you require any further information on the personal tax services this firm can offer please contact Elaine Morgan in our Tax and Trusts Team on 01604 463120 or see our Guidance Note
on Self Assessment.