Budget: a mixed bag for dentists
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- Published: Wednesday, 08 March 2017 20:41
- Written by News Editor
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Philip Hammond’s first 2017 budget contained no surprises, but was seen by many as a continuing reduction in the budget deficit and preparation for Brexit. Changes to national insurance for self-employed and a cut in the tax-free dividend allowance will affect dentists, as will deferral on the implementation of HMRC’s Making Tax Digital strategy.
The Investor’s Chronicle comments that Chancellor Philip Hammond kept a tight rein on the purse strings in the Budget with little in the way of fresh giveaways, although the social care system received a £2bn sticking plaster. Of interest to dentists are that Class 4 NIC’s are increasing from 9% to 10% in April 2018 and to 11% in 2019, which will affect all self-employed dentists. The tax-free Dividend Allowance is to be cut from £5000 to £2000 with effect from April 2018 although this will only affect incorporated practices.
The chancellor announced an increase to the national insurance contributions payable by self-employed people. Currently self-employed people pay a flat rate of £2.80 a week through Class 2 national insurance contributions (NICs) and 9 per cent through Class 4 contributions, on income between £8,060 and £43,000. The new system will see Class 4 contributions rise to 10 per cent from April 2018 and to 11 per cent in 2019. As previously announced, from April 2018, Class 2 NICs will be abolished. Employees pay a standard 12 per cent rate on national insurance contributions on the same level, and their employers also pay NI on their behalf.
The level of dividends individuals can receive tax free will be cut from £5,000 to £2,000 from 6 April 2018 following the chancellor's decision to slash the dividend allowance - just one year after introducing it.
Mr Hammond has confirmed the sugar tax levy from April 2018. Tax on drinks with more than 5g of sugar per 100ml will be levied by 18p per litre, while those with 8g or more of sugar per 100ml will have a tax of 24p per litre. But companies have been removing sugar from their products in order to divert the new charges. This means revenue from the tax is expected to be lower than first forecast, although the Department for Education (DfE) would still receive the £1bn they were promised from the tax.
On business rates, every British pub with a rateable value of less than £100,000 will receive a discount of £1,000 in 2017. In addition, any small businesses set to lose their rate relief once they tip over the new threshold will see increased costs capped at £50 a month. Finally, the Chancellor has set up a £300m fund for local councils to offer discretionary relief to the worst-hit firms.
On the proposed ‘Making Tax Digital’ NASDAL has commented:
“Following strong representations, the Chancellor announced that there would be a deferral on the implementation of HMRC’s Making Tax Digital (“MTD”) strategy for businesses. However, this was disappointing in that it only extended to the self-employed and landlords whose turnovers are below the VAT threshold (increased to £85,000 from April 2017). These will not now have to start making quarterly digital returns to HMRC until April 2019, instead of April 2018. This will bring them into line with businesses which are registered for and who pay VAT, where the start date for MTD had already been announced as April 2019, and will mean that many dental associates will have an extra year to prepare for MTD.
“But the sting in the tail is that those unincorporated businesses whose turnover is above the VAT threshold and who are not registered for VAT will still be required to make quarterly digital returns to HMRC from April 2018. This will include most dental practitioners and many dental associates. HMRC is seeking business volunteers to beta test the MTD programme during the coming year, before it goes live in April 2018, and practitioners may want to consider getting involved in this so that they can be well prepared for its eventual implementation.
“Dental practitioners operating via limited companies will not have to file quarterly MTD returns with HMRC until April 2020, so any unincorporated practices which have already been contemplating incorporation for other reasons may want to consider getting a move on!”
https://www.ft.com/content/1e9703e0-0401-11e7-aa5b-6bb07f5c8e12
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