Nearly 70 per cent of small business owners feel that recent and upcoming tax changes are going to have a negative impact on their businesses, according to a new poll.
From making tax digital to cuts to dividends allowance, there are a number of changes that could affect your business this year. And 69 per cent of small business owners think these changes are going to be for the worse, according to the 700 customers we surveyed. Here’s what’s in store, and how it might affect you.
One of the biggest changes introduced this year was the cut to dividend allowance. Up to the start of the 2018-2019 tax year, you could claim £5000 tax free if you paid yourself a dividend through your company. Now, the maximum is £2000.
In practice, this means you’ll be paying tax on £3000 more than you were last year, which could take a sizable bite out of your profits, depending on which tax bracket you fall into.
While Making Tax Digital hasn’t been fully introduced yet, it has been looming over small business owners for years.
This year, you’re able to sign up to the government’s pilot of the scheme ahead of its introduction in 2020. While it may feel like an extra burden to get used to the new system, it might be worth familiarising yourself with it before its use becomes compulsory.
If your business employs any staff, there are a couple of changes that could eat into your profits.
Firstly, the National Living Wage rose to £7.83 from £7.50 at the start of this tax year.
The second thing to be aware of is pensions. Again, this change came in in April, and you’re now obliged to pay a 2 per cent contribution to your employees’ pensions. This is up from 1 per cent last year, and will rise again to 3 per cent in 2019.
Want to know more? Check out our full article on 2018’s employment law changes
IR35 remains a cause for concern for many small businesses.
There are concerns about perceived flaws in how IR35 reform will work for the private sector, which may or may not be addressed before it's written into law.
The controversial reform will potentially shift the burden of determining employment status from the worker to the client or hirer.
If you have concerns about particular tax changes, make sure to speak to a qualified accountant.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
22 June 2020 • 9-minute read
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