Spring Budget 2017

[PartOfTheUnion]

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?

If you were already drawing the upper limit of the 7.5% divi tax then your extra £3K will be taxed at 32.5%

[Alan @ BroomeAffinity]

Well that could have been much much worse. We live to fight another year.

[Maslins]

Well that could have been much much worse. We live to fight another year.

My thoughts too. Bit baffled by all the tweets about small biz being demonised. Yes they'll mostly have a very modest tax increase, but nothing of any significance. I get the impression many were going to moan whatever, same way Labour of course saying it's a terrible budget bla bla.

Fingers crossed there's nothing hidden in the small print...

[DotasScandal]

Fingers crossed there's nothing hidden in the small print...

You're quite the optimist, aren't you?
March last year, APN-plagued contractors breathed a sigh of relief at first. Then someone dug out the infamous "2019 charge" from the small print.

The nastiest stuff is always in the small print.

[AtW]

Yes they'll mostly have a very modest tax increase, but nothing of any significance.

This year big anti-business thing is crazy business rates, so they just did not want to hit too hard some other groups, but that will change in Autumn proper budget, by then there will be some clues at how bad Brexit affecting economy

[TheCyclingProgrammer]

If you were already drawing the upper limit of the 7.5% divi tax then your extra £3K will be taxed at 32.5%

No it won't, if all of your non-dividend income is at least £5k below the higher rate tax threshold, then you will be paying 7.5% on the extra £3k regardless of your total dividend income. The reduction in dividend allowance has no affect on the normal tax bands.

E.g. somebody with £8k salary and £50k in dividends currently pays: 0% on the salary and first £3k of dividends (covered by personal allowance), 0% on next £5k of dividends (covered by dividend allowance), 7.5% on the next £35k of dividends and 32.5% on the last £7k.

With the reduction they will pay: 0% on the salary and first £3k of dividends (personal allowance), 0% on the next £2k of dividends, 7.5% on the next £38k of dividends and as before, 32.5% on the last £7k.

[Fred Bloggs]

Well that could have been much much worse. We live to fight another year.

Is that a joke? Contractors have had their taxation/income salami sliced year on year for more than a decade. It might look OK from where you are sitting, but I imagine many of the more thinking contractors are seriously considering their options. Each salami slice in isolation is almost nothing. But just think back 10 to 15 years and just try to remember how many slices of salami have already been cut from a contractor's income. It fills way more than a sandwich.

[MPwannadecentincome]

No it won't, if all of your non-dividend income is at least £5k below the higher rate tax threshold, then you will be paying 7.5% on the extra £3k regardless of your total dividend income. The reduction in dividend allowance has no affect on the normal tax bands.

E.g. somebody with £8k salary and £50k in dividends currently pays: 0% on the salary and first £3k of dividends (covered by personal allowance), 0% on next £5k of dividends (covered by dividend allowance), 7.5% on the next £35k of dividends and 32.5% on the last £7k.

With the reduction they will pay: 0% on the salary and first £3k of dividends (personal allowance), 0% on the next £2k of dividends, 7.5% on the next £38k of dividends and as before, 32.5% on the last £7k.

yup that sounds right!

[DotasScandal]

Well that could have been much much worse. We live to fight another year.

Says the almost-boiled frog

[SpontaneousOrder]

E.g. somebody with £8k salary and £50k in dividends currently pays: 0% on the salary and first £3k of dividends (covered by personal allowance), 0% on next £5k of dividends (covered by dividend allowance), 7.5% on the next £35k of dividends ...

That adds up to 51k ? higher rate starts at 43k. So 0% on 8k salary. 0% on 5k divis takes us to 13k. That means there is only 30k left at 7.5%.

Dividends still contribute to your taxable income insofar as the tax bands are concerned, right? **snipped**



Edit: Ignoring the duff example I snipped out...

8k salary + 3k divi = 0% for a total of 11k. Then 5k divi at 0% taking us to 16k.

Then for the rest of our divis, its requires 27k to take us to the higher rate threshold. So 27K at 7.5%.