The dust has settled from the latest spring budget, but what does it all mean? The main tax changes are:
A one-year deferral in Making Tax Digital for unincorporated business with a turnover of less than £85,000 (they are still trying to sort out all the issues) – more on this massive change to self-assessment to come at a future date.The personal allowance has increased by £500 to £11,500 – a tax saving of £100 for a basic rate payer.The corporation rate will fall to 19% in April 2017 and then 17% in April 2020.The tax-free dividend allowance will fall from £5,000 to £2,000 in 2018/19.An increase in inheritance tax relief for the family home. The existing nil rate band of £325,000 remains, but an additional nil rate band of up to £175,000 will be available to individuals passing on a residential property to descendants. It will be phased in as follows:• £100,000 in 2017 to 2018.
• £125,000 in 2018 to 2019.
• £150,000 in 2019 to 2020.
• £175,000 in 2020 to 2021.
For many, this has been a good spring budget – tax cuts (apart from changes to dividend allowances) and a delay to the dreaded Making Tax Digital. One of the more interesting positive changes (brought on by the failed attempt to increase the national insurance contributions of the self-employed) is the introduction of tax-free childcare.
Bank account
Essentially, it is a bank account you set up. For every £8 you pay into a childcare account, the Government will pay in £2. It will put in a maximum of £500 every three months for each child – or £1,000 if your child has a disability.
Out of this bank account, you can pay the childcare costs. The accounts will involve no fees and will allow you to build up credit for use when you need it most, for example during school holidays.
The Government is also allowing anyone to pay into the account, eg grandparents etc. With the increasing costs of childcare, this is a substantial change for self-employed people with no access to childcare vouchers (you can only get them if you are employed and your employer runs a childcare voucher scheme). Given the challenges in farming, and with the cost of childcare being the biggest financial outlay within a home, this change couldn’t come quick enough.
A spring budget pack can be downloaded for free at www.mcaaccountants.com/news-and-events.
Please note the advice given above is very general and cannot not be relied upon as each individual business case would need to be assessed. MCA Chartered Accountants cannot accept responsibility for decisions based upon this article.
The dust has settled from the latest spring budget, but what does it all mean? The main tax changes are:
A one-year deferral in Making Tax Digital for unincorporated business with a turnover of less than £85,000 (they are still trying to sort out all the issues) – more on this massive change to self-assessment to come at a future date.The personal allowance has increased by £500 to £11,500 – a tax saving of £100 for a basic rate payer.The corporation rate will fall to 19% in April 2017 and then 17% in April 2020.The tax-free dividend allowance will fall from £5,000 to £2,000 in 2018/19.An increase in inheritance tax relief for the family home. The existing nil rate band of £325,000 remains, but an additional nil rate band of up to £175,000 will be available to individuals passing on a residential property to descendants. It will be phased in as follows:• £100,000 in 2017 to 2018.
• £125,000 in 2018 to 2019.
• £150,000 in 2019 to 2020.
• £175,000 in 2020 to 2021.
For many, this has been a good spring budget – tax cuts (apart from changes to dividend allowances) and a delay to the dreaded Making Tax Digital. One of the more interesting positive changes (brought on by the failed attempt to increase the national insurance contributions of the self-employed) is the introduction of tax-free childcare.
Bank account
Essentially, it is a bank account you set up. For every £8 you pay into a childcare account, the Government will pay in £2. It will put in a maximum of £500 every three months for each child – or £1,000 if your child has a disability.
Out of this bank account, you can pay the childcare costs. The accounts will involve no fees and will allow you to build up credit for use when you need it most, for example during school holidays.
The Government is also allowing anyone to pay into the account, eg grandparents etc. With the increasing costs of childcare, this is a substantial change for self-employed people with no access to childcare vouchers (you can only get them if you are employed and your employer runs a childcare voucher scheme). Given the challenges in farming, and with the cost of childcare being the biggest financial outlay within a home, this change couldn’t come quick enough.
A spring budget pack can be downloaded for free at www.mcaaccountants.com/news-and-events.
Please note the advice given above is very general and cannot not be relied upon as each individual business case would need to be assessed. MCA Chartered Accountants cannot accept responsibility for decisions based upon this article.
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