Yesterday marked the final Spring Budget. From next year, the budget will take place in the Autumn. Rather than go out with a bang it was a fairly dull affair. Below are the main points I feel may be of relevance to my clients.
Reduction of dividend allowance
The annual dividend allowance will be reduced from the current £5,000 to £2,000 from April 2018. This will particularly hit small and medium sized business owners who take their profits as dividends.
However, this may make employer pension contributions a more attractive way of extracting profits.
Increase in self employed national insurance contributions
The self employed class 4 national insurance contributions (NICs) will rise from 9% to 10% from April 2018, with a further increase to 11% in April 2019. This coincides with the removal of the flat rate class 2 NICs for the self employed from April 2018.
Overseas pension transfer clampdown
A new 25% tax charge on the transfer of some overseas pension transfers is designed to stop the transfer of funds for circumstances other than those originally envisaged. There is no charge for someone moving their pension to their employer’s occupational scheme or to their country of residence.
This should help protect UK pension savers against overseas pension scammers.
Tax avoidance deterrents strengthened
The chancellor announced there would be a further crackdown on tax avoidance, with a new penalty for those professionals advisers who promote schemes which are later defeated by HMRC.
Reduced Money Purchase Annual Allowance (MPAA)
The amount of money that can be paid into a pension scheme after benefits have been accessed through pension flexibility rules has been cut from £10,000 to £4,000 from April 2017.
If you would like to discuss any of these areas, or anything else in the budget, please do get in contact.