The Spring Statement on 13 March 2018 did not give any significant points for interim managers. However, amongst the various normal quips of how wonderful the government is doing, there were 3 points of interest.
IR35
There may be a glimmer of hope that the extension to the private sector in April 2019 might be deferred, as no mention was made of it, but don’t hold your breath ! Government is running out of time if it is to legislate change in April 2019. Realistically, a consultation needs to be launched within a matter of weeks to guarantee enough time for full consideration.
VAT Threshold
There is to be a consultation on lowering the VAT Threshold which is currently at £85,000. It is set to stay at this level until Aril 2020 as part of the introduction of Making Tax Digital. However, it is currently much higher than the other EU and OECD countries.
Taxation of Self-Funded Work-related Training
This is currently allowable of the employer (ie the personal service company of the interim) incurs the cost of reimburses the interim. So there is no change here. However, if an employee pays for their own training, there is no tax relief. If a self-employed individual claims then this is allowable if it is ongoing for an existing skill but not for the introduction of a new skill. The government announced a consultation to review this.
David Pugh, IIM
Tony Evans says
14/03/2018 at 11:40Dividend Tax Free Allowance to fall as of April 6th.
In 2016, the dividend tax allowance was introduced on the basis of being a simplification for taxation in this area. People saw it as a benefit generally and was introduced with a ‘generous’ £5000 allowance. From April 6th, this will fall to £2000!
When introduced, it conveniently (for the Treasury) demolished in one stroke the tax concession to people in business running their own companies on their own account, that level of taxation recognising the risks taken. This had been the situation for many years.
This means that taxation of risk income is close to being taxed at the same level as if we were all employees, with all the safety and benefits of such employment and the benefits accrued in and out of work.
This change, for a basic rate income tax payer who receives £5000 in dividends currently, means that instead of paying no tax, will now find another £225 is being handed over to the Chancellor. For a higher income tax rate payer, this escalates to £975 and a rather generous £1143 if paying ‘additional’ income tax.
If you are an investor, it is of course possible to ‘wrap’ investments in tax free products such as ISAs or SIPPs, so side-stepping the tax issue. For those of us using dividend to live on historically, this is another issue.