The Chancellor’s latest Budget has been digested – and there are big changes affecting businesses and individuals.
Prominent among the numerous announcements made by George Osborne were the changes to tax on dividends, landlords’ income tax relief and inheritance tax.
The changes could have significant impacts upon clients and, over the coming months, we will be addressing these during client meetings, in phone calls and in our Autumn newsletter.
The Government’s abolishing the dividend tax credit from 6th April, 2016, and introducing a new Dividend Tax Allowance of £5,000 a year.
Those who receive more than £5,000 in annual dividend payments will have to pay tax on that income.
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.
Landlords will no longer be able to deduct all of their finance costs from their property income.
They will instead receive a basic rate reduction from their income tax liability for their finance costs.
As for Inheritance Tax, the nil rate band (£325,000) is to remain frozen until April 2021.
An additional nil rate band is to be introduced where a residence is passed on death to direct descendants such as a child or a grandchild.
This will initially be £100,000 in 2017/18, rising to £125,000 in 2018/19, £150,000 in 2019/20, and £175,000 in 2020/21.
For more information, go to our Budget section.
If you have any immediate questions about the Budget and its impact on you, please don’t hesitate to contact us.