What has been dropped from the Budget ahead of the General Election
A significant proportion of the Finance Bill has been dropped as the Government prepares for the Election.
The items dropped include:
- Making Tax Digital (MTD)
- Drop in the dividend allowance to £2,000
- New tax-free trading and property income allowances of £1,000
- Changes to corporation tax losses carried forward
- Changes to the substantial shareholdings exemption
- The simplified cash basis for unincoporated businesses
Although these provisions are dropped at the moment, they are likely to return to a future Finance Bill, possibly as soon as the autumn.
IR35 and public sector
Where a public sector organisation engages an off-payroll worker through their own limited company, that organisation (or the recruitment agency where the worker is engaged through that agency) will become responsible for determining whether the rules should apply, and, if so, for paying the right tax and NICs.
Changes to the Dividend Allowance - dropped for now but expect it to return
The tax-free dividend allowance was introduced from April 2016 so that the first £5,000 of dividend income would be tax free.
The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018, although this has been dropped from the Finance Bill at the moment but will probably return in the future.
These changes could mean a larger tax liability going forward. Contact RZ Associates if this is an issue that you wish to discuss.