Tax Tips | March

Join us every month as Wes discusses recent Tax updates you need to be aware of, how you can mitigate the effects and save yourself and your business money. Want to hear about a particular topic? Let us know in the comments below.

U-turn on National Insurance rise for Self-Employed

The Chancellor, Philip Hammond, has announced that the proposed 1% rise to Class 4 National Insurance payable by most self-employed individuals announced in the Budget, will now not take place.

Whether due to pressure from his fellow MP’s or realisation that the proposed changes broke the Conservative General Election manifesto – probably a bit of both – most self-employed individuals will continue to pay a maximum of 9% Class 4 National Insurance on their profits.

Class 2 National Insurance – a flat rate of £2.85 per week for those with profits above £6,025 in 2017/18 – is still set to be abolished from 6th April 2018, providing the self-employed with nearly £150 off their tax bills.

This may make for some interesting reading when we get to the ‘first’ Autumn Budget later in the year, as Mr Hammond attempts to fill the void left behind without increasing Income Tax, VAT or National Insurance rates.….

If you are not certain whether a self-employment or a limited company structure is best for you, why not give one of our Principal Advisers a call?

Does your Company or Partnership including a corporate member, own a residential property?

If so, you may already be aware of the Annual Tax on Enveloped Dwellings (ATED) regime, whereby if the market value of the residential property exceeds £500,000 you have to submit an ATED return to HMRC by the end of April each year and possibly pay a tax charge if it is used by anyone connected to you or your business.

The ATED rules commenced 1 April 2012 and this was originally the date you needed to use to value the property, however this valuation has to be reviewed once every 5 years.   If you own property which may be close to the £500,000 value, you therefore need to consider its value as of 1^st April 2017 to see if you now exceed these limits and are now caught by the ATED regime.

It is not necessary to obtain an official valuation from an estate agent or surveyor, especially if a relief will apply as you rent the property to unrelated third parties and you wish to avoid the costs.  You do however need to be as accurate as possible in case HMRC successfully challenge the value taking it over the £500,000 limit, as they could then charge harsh penalties and interest.  You need to consider what an open market willing buyer may pay and we recommend that as a minimum you get a detailed estimate from a property website such as Zoopla and keep evidence of this.  If the property is close to the £500,000 value you may wish to then get a quote from an estate agent to back up your case should HMRC ever ask!

If you are caught by the ATED rules, or if you think you might be, get in touch with your client manager who can guide you through what needs to be done before the end of April 2017 to keep you up to date and to avoid unnecessary penalties.

Contact us: Call us on 01474 853 856 to speak to one of our Client Managers or Principal Advisers. Alternatively, you can complete the Contact Us Form and someone will give you a call back at a time that suits you.