A limited company must pay Corporation Tax on its taxable profits. You don’t get a bill for Corporation Tax – it’s up to you to work out how much your company owes. Are you up to speed?
- Corporation tax rates– The corporation tax rate will be reduced from 20% to 19% in 2017 and 18% in 2020.
- Corporation tax payment dates– New payment dates will be introduced for companies and groups with annual taxable profits of £20m or more. This applies for accounting periods starting on or after 1 April 2017.
- Annual Investment allowance (AIA)– The permanent level of the AIA will increase to £200,000 for all qualifying investment in plant and machinery made on or after 1 January 2016.
- Corporation tax relief for business goodwill amortisation– Relief will be restricted for the cost of “goodwill” in respect of all acquisitions and disposals on or after 8 July 2015.
- Dividend taxation– The Dividend Tax Credit will be abolished from April 2016. A new Dividend Tax Allowance of £5,000 will be introduced from this date. The new rates of tax on dividend income above the allowance will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
- Employment allowance– The NIC Employment Allowance will be increased, from April 2016, from £2,000 to £3,000.
Do you know how the budget will affect your personal tax situation?
- Personal allowance– The personal allowance will increase from £10,600 in 2015/16 to £11,000 in 2016/17 and £11,200 in 2017/18.
- Higher rate threshold – The 40% higher rate threshold will rise from £42,385 in 2015/16 to £43,000 in 2016/17 and £43,600 in 2017/18. The NICs upper earning limit will also increase to remain aligned with the higher rate threshold.
- Non-UK domiciled individuals – The rules on non-domiciled individuals will change from 6 April 2017.
- Inheritance tax (IHT)– New measures are being introduced designed to remove the majority of family homes from the (IHT) net, where the residence is left to children or grandchildren on death.
- Buy to let landlords– The relief on finance costs that individual landlords of residential property will be restricted to the basic rate of tax. From April 2016 the Wear and Tear Allowance will be replaced with a new relief that allows all residential landlords to deduct the actual costs of replacing furnishings.
- Rent a room– The level of rent-a-room relief will be increased from April 2016 from £4,250 to £7,500.
- National living wage (NLW)– A NLW will be introduced for workers aged 25 and above, by introducing a new premium on top of the National Minimum Wage. From April 2016, the NLW will be set at £7.20.
- Pensions: Lifetime allowance – This will reduce to £1 million on 6 April 2016. The allowance is currently £1.25 million. There will protection available for those whose savings already exceed the limit under the usual arrangements. Note that a claim for fixed protection 2016 will need to be in place by 5 April 2016. From April 2018 the pensions lifetime allowance will be subject to consumer prices index (CPI) inflation.
Confused? Talk to the expert
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