Spring Budget 2017

[jamesbrown]

There could be an immediate change to div tax to prevent people jumping ahead of the change, but I'd be surprised. Immediate changes have many drawbacks, and since the rate change is not likely to be more than 2-3%, the gain from pushing it through now rather than on 6 April is likely to be small. Also, the new dividend tax hasn't even been in effect a year. You hit pensioners again and there will be an uproar, especially since their savings interest rates are negligible.

There's also an advantage to preannouncing it. If you announce it before it takes effect, some people will bring dividend payments forward, which will mean a nice little cash boost for the Treasury when those taxes are paid. If the dividends are deferred until mid-April, the Treasury doesn't get the tax on them until much later.

I'll actually be surprised if there is either a higher NI for sole traders or higher dividend tax taking effect before April 2018. They might announce it now, or they might announce a consultation on it now, with it actually being announced in the Autumn. But I doubt it happens either tomorrow or in April.

Yeah, by "immediate", I mean 6 April. By convention, they can implement taxes on Budget day, but they only do this for taxes that create an immediate opportunity for avoidance or arbitrage. However, I can't see them announcing tax increases for April 2018; they'd wait for the Autumn Budget in that case, because they'll have the wider strategy worked out. I think it will be April 6 this year for straightforward tax rises (C4 NI and divis) or nothing and, either way, a more comprehensive strategy in the Autumn Budget.

[SlipTheJab]

Yeah, by "immediate", I mean 6 April. By convention, they can implement taxes on Budget day, but they only do this for taxes that create an immediate opportunity for avoidance or arbitrage. However, I can't see them announcing tax increases for April 2018; they'd wait for the Autumn Budget in that case, because they'll have the wider strategy worked out. I think it will be April 6 this year for straightforward tax rises (C4 NI and divis) or nothing and, either way, a more comprehensive strategy in the Autumn Budget.

I'm knocking out a 10k dividend today just in case!

[MrMarkyMark]

Ftfy

i'm knocking one out today just in case!

[SlipTheJab]

Ftfy

I'll post 7.5% to HMRC as per the new rules

[WordIsBond]

Yeah, by "immediate", I mean 6 April.

Oh, sorry, I misunderstood (obviously).

They used to do immediate for petrol duty increases. It's not all that different from a div tax increase, I guess.

One problem with doing an immediate div tax is it encourages unusual behaviour just before budgets in future. Companies might do a £10K dividend the day before, for no business purpose at all, just because they don't trust the Budget not to unexpectedly hit them. A Labour government might do it but I doubt a Tory one would, even a faux Tory government like this one.

[jamesbrown]

Oh, sorry, I misunderstood (obviously).

They used to do immediate for petrol duty increases. It's not all that different from a div tax increase, I guess.

One problem with doing an immediate div tax is it encourages unusual behaviour just before budgets in future. Companies might do a £10K dividend the day before, for no business purpose at all, just because they don't trust the Budget not to unexpectedly hit them. A Labour government might do it but I doubt a Tory one would, even a faux Tory government like this one.

My fault - I wasn't clear. Anyway, agreed, and they don't want an annual deposit of 7.5% of what STJ is giving

[Maslins]

Yeah by immediate I meant to come in from 6 Apr 2017 too, should have been clearer.

Re PS spending time/effort on this, I guess what I meant was that many have already made a call on what they're going to do. The IR35 online tool was released so late, that given the timescales for these organisations to consider it all, consider the implications, discuss with contractors, take their feedback into account, change their admin etc etc etc it simply couldn't be done within a month. Therefore many will have potentially pushed some contractors into umbrella/similar when the tool now says they were outside IR35 anyway. What annoys me is that this will be considered a success by Hammond, as despite it being done by dubious means, he'll have got the result he wanted.

[eek]

Oh, sorry, I misunderstood (obviously).

They used to do immediate for petrol duty increases. It's not all that different from a div tax increase, I guess.

One problem with doing an immediate div tax is it encourages unusual behaviour just before budgets in future. Companies might do a £10K dividend the day before, for no business purpose at all, just because they don't trust the Budget not to unexpectedly hit them. A Labour government might do it but I doubt a Tory one would, even a faux Tory government like this one.

There is a big difference between Duty changes (always implemented from close of business that day) and tax changes - the immediate changes are used attached to specific transactions (house sales say) rather than moveable items....

Its easy to say when a transaction occurs far harder to deal with a payment....

[CDJ]

So... Budget 2017 for Ltd Companies is just dropping the tax free threshold for Divis from £5k to £2k - am I right in thinking this is essentially just £3000 x 7.5%??

Have I missed anything else?

[jamesbrown]

So... Budget 2017 for Ltd Companies is just dropping the tax free threshold for Divis from £5k to £2k - am I right in thinking this is essentially just £3000 x 7.5%??

Have I missed anything else?

No, that's about it, but as eek pointed out elsewhere, we'll need the Red Book for details. I guess we were broadly correct about there being immediate measures on C4 NI and div tax, but the scale was less than expected.