Money4Dentists explain that when it comes to tax planning, it is important to keep on top of tax changes that might apply to you. So let’s recap on what happened in the Spring Budget.
The first thing you should know is that the main rate of Class 4 National Insurance Contributions is set to increase from 9 per cent to 10 ten percent in April 2018. Anything above £43,000 will continue to be taxed at 2 per cent, while Class 2 National Insurance – a rate paid on any profits over £5,965 a year – is set to be scrapped in April 2018.
The Government has also imposed a new reform that will decrease the tax-free allowance on share dividends from £5,000 to £2,000 – but unless you are a shareholder or company owner of an incorporated business, this won’t affect you.
Another key measure that has been introduced to tackle tax avoidance and aggressive tax planning, is the plan to apply a 25 per cent transfer charge to qualifying recognised overseas pension schemes. Combined, these measures will make mitigating tax much harder moving forward.
The good news is that personal tax-free allowance will increase this year to £11,500 from £11,000 as planned, and again to £12,500 by 2020.
You may also be pleased to know that taxation on tobacco will rise by 2 per cent above Retail Price Index (RPI) inflation along with alcohol, which is set to increase in line with RPI – not to mention that the much anticipated sugar tax is set to go ahead as planned. This will hopefully make a difference to patients’ oral health.
For the most part, it wasn't a particularly groundbreaking Budget, nor will it have a huge impact on dentists. It just means higher earners should expect to pay the appropriate amount of tax – which isn’t a new concept, it’s just one that the Government is looking to clamp down on. If you are thinking of maximising the legitimate tax reliefs available or simply want to find out more about how the Budget could affect you, get in touch with your Independent Financial Adviser.
Posted by Gemma