5 big tax changes
1. Making Tax Digital
From April 2018 Sole Traders and Partnerships earning £10,000 or more per year will need to make quarterly electronic submissions to HMRC declaring their income and expenditure for that quarter. The submissions will need to be made using specific software and so paper records will not be accepted.
Rates from April 2016 are 10% for basic rate taxpayers, 20% for higher and additional rate tax payers except for gains made from residential property which remain at 18% and 28% respectively.
3. Permanent work place
The rules and definitions as to what is a permanent place of work are being amended so workers and contractors engaged through an employment intermediary such as an umbrella company or a personal service company will no longer be able to claim tax relief on home to work travel and subsistence expenses from April 2016 which brings them in to line with the rules that apply to permanent employees.
4. Wear and tear allowance
From April 2016 the Wear and Tear allowance that was available to property landlords will be discontinued. Instead a relief will be available on the cost of replacing domestic items such as furniture, appliances and kitchenware. Note that the relief is not available on the initial cost of equipping a let property only on purchase of replacements.
5. Dividends and savings
Tax on dividends and interest earned on savings is changing from April 2016. Basic Rate taxpayers will get the first £1,000 of interest free of tax and the first £5,000 of dividend income will also be free of tax. Then basic rate taxpayers will pay 7.5% tax on dividends over £5,000 and higher rate taxpayers will be taxed at 32.5%.