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April 2016 tax changes; It’s the time of the year that UK businesses brace themselves for, tax change time. Our annual reminder that anything can and will change. To help prevent unpleasant surprises, we thought we’d list the expected changes for the 2016/2017 year for you below:

Man completing online tax form with smartphone

1.Digital personal tax accounts will require some to update their details and pay tax 4 times per year – this will affect those who use Self-Assessment

2. Personal savings allowance – earn up to £1,000 in interest on savings before paying tax on them – this could affect anyone

3. Dividend taxation, everyone will be able to earn £5,000 of dividend income without tax. Payments in excess of £5,000 will incur a 7.5% charge for basic-rate payers, 32.5% for higher-rate and 38.1% for additional-rate payers! This will affect many contractors and owner-managed businesses. Click here to read our recent blog for further info

4. Flat Rate state pension is expected to cause a lot of confusion and some may lose out – this will affect anyone who reaches retirement age after 6th April

5. Pension for high earners, those who currently earn more than £150,000 pa will see their pension contribution limit tapered from £40,00 to £10,000 – this will affect those who currently earn a high wage

6. Commission deducted for financial advice on Isas, pensions and investments will be cut out entirely – this will benefit anyone who has long term savings

7. Innovative Finance Isa – a brand new Isa allowing tax-free investment peer-to-peer loans – this will help higher-rate tax payers to save money

8. The government will chase landlords for tax on income from online property rentals, finally cracking down in this market – landlords beware! Read more in our recent Landlord Tax blog here

9. Three percent increase on buy-to-let stamp duty for second home owners

10. From April the national living wage will be £7.20/h for those 25 and over, minimum wage will remain the same for all workers 24 and under. This is likely to impact SMEs

11. Those working through umbrella companies and those with limited companies caught by IR35 will not be able to claim tax relief on travel or subsistence expenses. This will affect some contractors

12. Personal allowance increases to £11,000, this will benefit everyone with an income over £10,600

13. VAT registration threshold will increase by only £1000 to £83,000, this is likely to affect self-employed, contractors and smaller businesses

14. Directors loans will be subject to a 32.5% charge if not repaid within 9 months – again, this is likely to affect contractors and small business owners

15. Capital Gains Tax will decrease from 28% to 20% for higher rate tax payers while basic rate payers will see a reduction from 18% to only 10%. The rates will not, however, reduce for gains made on residential properties – likely to affect entrepreneurs and anyone who wants to go in to MVL (Members Voluntary Liquidation)

16. Topic of much controversy of late, the government is cracking down on large online businesses who sell within the UK making them jointly responsible and liable for unpaid VAT if the seller is overseas – this will affect larger online businesses

If any of the above April 2016 tax changes are likely to impact your business, perhaps it’s time for a no-obligation chat with one of our team members. Call us on 0161 477 6789 / 02031 741 436 Or email us at [email protected]

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