Chancellor targets FHL, VAT and HICBC in Budget
Chancellor Jeremy Hunt today abolished the furnished holiday lettings regime and the non-dom tax status in his Spring Budget speech, allowing him to fund another 2% cut in national insurance and increase the VAT threshold. He also announced plans to reform the high income child benefit charge.
Replies (70)
Please login or register to join the discussion.
It must be cheaper to stay self employed now with another NI cut? One day the government will do something to help small companies instead of the constant squeezing they've done over the last 14 years while giving their pals in big companies tax cuts.
And of all the things we need with the country crumbling, 4% off selling second homes? Give me a break.
They'll be gone soon, and good riddance.
Yes I was thinking the same thing.
26% self employed (20% income tax + 6% NI)
27.75 ltd co (19% CT + 8.75% dividend tax)
Only very rough basic rate calc ignoring other benefits of ltd.
Not so. the outrageous 8.75% divi tax applies to the 81% left after CT. That's just about 7% so a total of 26%, the same tax rate as self employment.
Not so. the outrageous 8.75% divi tax applies to the 81% left after CT. That's just about 7% so a total of 26%, the same tax rate as self employment.
Ah yes sorry about that, you're quite right.
One benefit still is having the choice to only go up to £50,270 whereas Sole Trade you have less say on slipping into higher rate, but completely agree the last few years the financial benefit gap has closed significantly which doesn't compensate for the extra risk of someone maybe moving from PAYE to set up a new company and in my view doesn't encourage entrepreneurship and therefore growth.
Not quite as simple as that as dividends are paid net of corporation tax.
£1,000 of profit leaves £810 to pay as a dividend, to be taxed at 8.75%, so leaving £739.13. Effective tax rate of 26.087%.
So it's a bit of a wash. You do get the dividend allowance, but it shrinks every year it seems.
yes thats what they want you to think so that you de-incorporate and pay CGT if you are liable to do so then go back to self employed regime so that they can hammer you for quarterly payments under MTD
It was such a rubbish budget wasn't it.
If they think voters will be seduced to vote Tory after this they are way more removed from reality than ever before. Awaiting that council tax bill for 2024/5 to see how much of that '£900' will be swept up.
It must be cheaper to stay self employed now with another NI cut? One day the government will do something to help small companies instead of the constant squeezing they've done over the last 14 years while giving their pals in big companies tax cuts.
And of all the things we need with the country crumbling, 4% off selling second homes? Give me a break.
They'll be gone soon, and good riddance.
Quite - we're already at the stage where it's not worth incorporating a sole trader, but wasn't necessarily worth the faff of disincorporating either - this will push more in that direction though, especially with public filing of P&Ls in the pipeline.
I have paid fairly high rates of NI all my working life. Next week I turn 66 and no longer need to pay NI. In the last three months the chancellor has reduced Ni from 12% to 8%. Why is it I feel somewhat miffed, to put it lightly?
I have paid fairly high rates of NI all my working life. Next week I turn 66 and no longer need to pay NI. In the last three months the chancellor has reduced Ni from 12% to 8%. Why is it I feel somewhat miffed, to put it lightly?
Surprised this post wasn't the first one in.
Thought I'd missed something big time.......
An 10% to 8% cut in income tax!
Yes a quick correction needed on that and also it should refer to abolition of the FHL regime not relief.
Thanks for pointing out - we've amended now - sorry about that! 18 articles to sub and publish today our eyes are going...
CT still far higher than before, dividend and income tax the same. Thanks for that.
Would have preferred to have seen removal of rebasing for IHT, reduction in CT.
The FHL rules were there to compensate the increased risk and hassle of renting out a holiday let. No doubt the local authorities will still inflict an additional rates levy in addition to the unwelcome scrapping of the FHL regime.
Disappointed that there was nothing at all for pensioners but I suppose that is because we had the triple lock increase. It still means that more pensioners are going to be paying tax though and potentially trying (unsuccessfully?) to deal with HMRC!
Reading comments on the Telegraph yesterday there is an awful lot of ungrateful ancient Brits. I’ll be one soon and will be very grateful.
Perhaps the most politically inept budget speech ever. I seem to remember the Sun calling an unfortunate England Manager Turnip Head. What vegetable sums up Hunt?
HICBC (which his preamble almost made it sound like he was going to do the sensible thing and scrap) now tapering off at £60k will surely make little difference - people will just try to stay below £50,270 instead of £50k. And I'm sure HMRC will tackle the move to household assessment with the same famed level of efficiency and competence we know and love them for!
As for the NI cut - I'm not going to decry any tax cut, but funny how the 'dividend tax' goes up when NI does, but never comes down!
NI Cut, does nothing for those earning below £20k, moving the thresholds for Tax and NI to £15k would benefit those people proportionately more, which is surely should be our aim, help the lowest earners.
VAT threshold, needs to be £100k, people are squeezed into VAT because costs have risen so much they need to charge more and take less profit! Many register as a last resort.
Child Benefit, finally some sense to make it household basis.
Abolishing FHL, I'm personally all for that.
Non Doms, excellent BUT needs a rule that you only get a TOTAL of 4 years for your lifetime, you cant go and then come back and receive another 4 years.
CGT Cut, not fussed either way.
My biggest disappointment here is that he hasn't gone after Foreign Companies and Individuals paying no CGT at all when disposing of commercial property, estimates range from an annual windfall of £5-8b just based on what is sold currently by those groups, meaning there is still a huge inequality between those groups and UK companies / individuals.
My overall feeling for the last few years is Government don't want small companies, they'd rather everyone just be a Sole Trade or work for a huge employer, this budget for me does nothing to quell that.
Eh? Non-UK residents do pay CGT/CT when selling (directly/indirectly) any UK land & buildings.
Lets not also forget two enormous public sector IT projects for NHS and police/justice system. What could possibly go wrong?
Also, a nice little rubbing of hands for Fujitsu maybe?
NHS already wasted I think £10BN on an aborted IT transformation project I think back in 2012-2013
https://www.theguardian.com/society/2013/sep/18/nhs-records-system-10bn
The waste in government spending just makes me so mad!!!
In other times there would have been calls for the tumbrills which might be where we are being pushed.
Notice he slid in that he would make sure HMRC would get (more or less) whatever they wanted to collect tax. So no sign of AML, IR35 and MTD being given the elbow.
Given the upcoming likely change of government, how much of this (except the NI reductions in next month) do we believe will actually happen?
Well since most of it is from 1 April, probably the vast majority. How much stays is a different matter.
sigh
Hunt said he was going to "end that unfairness" of the HICBC but warned that it requires "significant reforms to the tax system, including allowing HMRC to collect household level information".
so those that have been moaning means we will probably end up withn an even more complciated system where we need sumary income levels for both partners
arghhhhhhhhhhhhhhhhhhhhhhh
The complication is one thing. The financial coercion of abused spouses and partners is another.
Mileage allowances remain unchanged again. 45p and 25p over 10,000 miles have been unchanged for a decade!
So, FHLs no longer being given favourable CGT treatment, nor being part of the VAT system?
Bet they didn't factor that into the tax gain. It's nonsense anyway. Surely anyone wanting an FHL will just buy property through a company in future, whilst debt laden existing landlords will incorporate the business. Can't see it making any difference at all.
"That will bring tens of thousands of businesses out of paying VAT altogether"...
Hmm, businesses don't pay VAT, they collect it from their customers....
Indeed. And I doubt a mere £5k uplift would equate to 'tens of thousands' of businesses anyway. It might put the registration date off by a few months max.
Jeremy Hunt wanted to isolate people who tested positive for a cold. How much business was lost and how much money was splurged during that whole episode. I am from the government and I am here to help.....
Pretty pathetic in my view, pile of garbage - still have the highest tax burden for 70 years -35 - 37% of GDP overall (depending on which statistic you take)
I understand he has to balance the books but this is not a budget for growth.
As a start get rid of net Zero subsidies which as I recall were £20BN, overseas funding another £15BN that's £35 BN as a start to reduce corporation tax and income tax
And cut the wasteful civil service!!!!
The raising of the VAT, while small, is welcome. We knew from press reports that NI would be cut again which is a small saving to counter fiscal drag.
Otherwise "is that it?"