Last month we welcomed in 2018 with a quick 'knees up' before getting back straight back to the grind shortly after. January is generally a month of long hours and extra shots of coffee at KP Simpson as the personal tax deadline is the 31st. For all of our clients we have been preparing, checking and double checking every scrap of paper to make sure the correct tax is paid on time.
Now, as we enter February, our main focus is how we can protect our clients with small businesses from the changes to taxing in 2018. Two years since the introduction of the dividend tax allowance, it will be cut. The tax break will see a massive reduction from £5,000 to £2,000, meaning that an estimated 2.3 million people will end up paying more tax. The average loss has been calculated at £315, but for many it will be a lot more. After earning over the £2,000 threshold, you will be taxed 7.5% if you are a basic rate tax payer.
Following on from this April, welcomes, though for many not a warm welcome, the second phase of the changes to tax relief on mortgage interest payment. Higher rate tax payers only receive 75% mortgage interest relief at 40% and 25% at 20%. By 2020/21 landlords will only receive 20% tax relief on mortgage interest, even if they are a higher rate tax payer.
There are ways to avoid being completely hit by the upcoming changes, such as using ISA’s or SIPP’s. We can help individuals, small and medium businesses with their accounts and have dedicated team members to ensure that you’re always well informed and up to date with financial changes.
