If you have an auto-enrolment pension scheme set up and are deducting pensions already then, the amount of pension contributions you will deduct and contribute for and behalf of your employees is changing. The minimum contribution you must make increases from the current minimum of a total contribution of 2% of qualifying earnings on 6 April 2018, rising to 5%, and on 6 April 2019, reaching a total minimum amount of 8%
These contributions are split in the following way:
| Date effective
||Employer minimum contribution
||Total minimum contribution
|Currently until 5 April 2018
|6 April 2018 to 5 April 2019
|6 April 2019 onwards
Your employees should be made aware that they will be contributing 3% after this date to head off any queries regarding the increase in pension contributions.
If we are your payroll provider we will ensure you fully comply with these changes.
Buy To Let Properties
The restrictions of the tax deductibility of mortgage interest continue to bite with only 25% of the mortgage interest paid fully deductible the rest will be subject to a basic rate reducer. This means that if you are a higher rate taxpayer with one or more rental properties then you will be paying more tax. It could also mean that these properties aren’t viable from an income point of view.
Beware though that if you sell the property you will now be subject to a higher rate of capital gains 18% for basic rate payers and 28% for higher rate taxpayers.
If you are our client and are unsure if you should buy or sell your Rental Property please get in touch.
The Dividends Allowances
When George Osbourne introduced the 7.5% tax on dividends the shock was offset a little by the £5,000 tax-free dividends allowance but we were sure this was only a temporary buffer.
Sure, enough from April this reduces to £2000 which means an additional tax liability of £225 for basic rate payer, £975 for a higher rate taxpayer and £1,1423 for additional rate taxpayer.
Undoubtedly this will reduce to NIL in the future.
Car Tax Changes
From 1st April 2017, the Vehicle Excise Duty or VED came into force making many cars much more expensive to run.
Further changes apply form 1st April 2018 New Diesel cars move up a band making them more expenses and Diesel company car tax will increase from 3% to 4%
For a Ford Focus diesel with 99g/km CO2 emissions the cost of the first year’s tax will rise by £20 to £145 and for a Range Rover Evoque SD4 (153g/km CO2) showroom tax will rise by £315 to £830.
For more info on this see this article in What Car https://www.whatcar.com/advice/buying/ved-car-tax-changes-in-2017-what-do-i-need-to-know/
The Cost of taking too many dividends
You may or may not be aware that dividends can only be taken out of the business if there is enough profit in the company. Therefore, you cannot take out more dividends than there is total profit.
If you take out more dividends than there is profit, HMRC will charge you 32.5% tax on the extra amount you have withdrawn from the company. This is in addition to the normal tax you would pay when receiving this level of income.
Whilst this is not new in April 2018 it’s worth considering if there is enough profit to take money out of the business as dividends.
We continue to monitor our clients for this and will warn you if there is a potential issue.