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George Osborne presented the first Spring Budget of this Parliament
on Wednesday 16 March 2016.

The summary concentrates on the tax measures which include:

• Reductions in the rates of capital gains tax

• Introduction of a Lifetime ISA for under 40s

• Changes to Entrepreneurs’ Relief

• Abolition of Class 2 NIC

• Reduction in the corporation tax rate

• Reforms to corporate tax losses.

Dividends are commonly used by business owners to extract profits from their company. In most situations this is particularly efficient as dividends don’t attract National Insurance Contributions.

From 6 April 2016 the tax rates for dividends will increase by 7.5% across the board. This will mean that a basic rate taxpayer, who currently pays 0% on dividends will pay 7.5%; and a higher rate taxpayer, who currently pays 25%, will pay 32.5%.

There will however be a new £5,000 tax-free dividend allowance for all taxpayers and the notional 10% tax credit will be abolished.

These new rules are clearly going to significantly increase the tax payable by most business owners. For example, anyone drawing dividends of £30,000 (in addition to a small salary to cover their personal allowance) currently pays tax of £330 on those dividends. From April 2016 the same £30,000 dividends will cost £1,875 i.e. an increase of £1,545.

As a result it may be beneficial to look at whether it is possible to take more income before the changes take effect, consider introducing spouses as shareholders (if not done already) and review your profit extraction polices as a whole.

If you would like to speak to us about these changes and your options please get in touch.

On Wednesday 25 November the Chancellor George Osborne presented the first Autumn Statement of this Parliament along with
the Spending Review.

His speech and the supporting documentation set out both tax and economic measures.
Our summary concentrates on the tax measures which include:

• changes to the prospective Tax-Free Childcare scheme

• reversal of most of the tax credit proposals

• retaining the 3% diesel supplement for company cars which was to be abolished

• the introduction of an apprenticeship levy

• proposals to restrict tax relief for travel and subsistence expenses for workers engaged

  through employment intermediaries

• the introduction of a payment on account of any capital gains tax due on the disposal

  of residential property

• the introduction of higher rates of Stamp Duty Land Tax on purchases of additional

  residential properties.

In the Budgets in March and July the government announced various proposals many of which have been subject to consultation with interested parties. Some of these proposals are summarised here. Draft legislation relating to many of these areas will be published on 9 December and some of the details may change as a result.

Our summary also provides a reminder of other key developments which are to take place from April 2016.

Cloud accounting will revolutionise the way you control your finances, allowing you to manage your business  smarter and faster than ever before. The ability to access and manage your accounts anywhere anytime is now a reality, whilst all of your financial information is securely stored in the Cloud. We can work with you in real time, from any location, to support you in overseeing your business and finances.

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