FINANCE
Hear it from the experts …
Important changes to the tax system
Corporation Tax The Corporation Tax rate drops from 20 % to 19 % on 1st April 2017( and to 17 % on 1st April 2020). This means that Companies will pay a bit less Corporation Tax going forward!
Dividend Tax – the bad news The impact of the dividend tax( an extra 7.5 % on dividends received in excess of £ 5,000) will more than cover any saving from a reduction in Corporation Tax. The big news in January 2018 will be the shock many taxpayers will receive when they see how much tax they have to pay. For example, a woman who receives £ 20,000 in dividends, from shares she holds in the Company her husband runs, may not be used to having any tax to pay. But she will now have to:
a) Submit a 2017 Self-Assessment Tax Return
and
b) Have to pay tax in January 2018 of £ 1,125 plus Payments On Account( see our video on payments on account)
If her husband receives a similar amount of dividends, his tax bill will be higher by the same amount.
National Minimum Wage On 1st April 2017, the National Minimum Wage, for over people aged 25 and over, increases to £ 7.50 / hour. For a 37.5 hour week, this equates to £ 281.25 / week or £ 14,625.00 / year.
Mortgage Interest on Buy-to-let properties
The first stage in restricting higher rate tax relief on mortgage interest begins on 6th April 2017. For the 2017 / 18 tax year, three quarters of the mortgage interest obtains tax relief; and one quarter is used to calculate a tax reduction at 20 %. This sounds complicated – and it is.
Peter Bromiley ACA Partner
I want my Company to pay the Golf Club membership for my staff as a gift. Can I provide it as a benefit? I understand it’ s allowable even for Directors. Are there consequences?
Your Company could pay the membership – and it would obtain tax relief, and reduce your Corporation Tax bill. But, it would be a taxable Benefit in Kind( BIK) for you and your staff. The BIK would have to be divided in a fair way – perhaps the number of times anyone uses the club? You would all have to pay extra income tax – and your Company would have to pay extra N. l.
If you take customers to the Club, it could reduce the taxable BIK � because some of the cost would count as entertainment( which is itself not tax deductible). Basically, either way there is tax payable, I suggest you simply do what is true.
Peter Bromiley ACA
www. ask-ams. co. uk @ AMSAccountancy
Ask AMS Advice for small businesses AMS Accountancy Ltd. 01793 818400
www. ams-accountancy. co. uk
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10 THE BUSINESS EXCHANGE 2017