Budget Comment – Professional Firms

9th March 2017 by Fiona Hotston Moore

As predicted there was not much for any business including professional firms to get excited about in the Budget.

There was a moment a third of the way through the Speech when the Chancellor developed a discussion on the tax advantages of the self employed. He spoke about reducing the tax benefits of working through one structure rather than another. A clear suggestion that partners in professional firms might expect to see changes. One of the obvious areas would be the treatment of cars. Partnership cars generally receive a kinder tax treatment than the company car regime. Fortunately the Chancellor concluded only by announcing a study has been commissioned into the different employment practices so we escape unscathed for now and wait to see the outcome of the study.

The Chancellor did however announce an increase in NIC costs for self employed partners. Fortunately when combined with the increase in threshold before higher rate tax, the impact is minimal.

In 2017-18 the tax bill will fall by approximately £200 whilst the net increase in NIC is £220. In the following year 2018-19 the additional NIC will be £370.   

Professional firms using services companies will however start to feel the pain with the reduction of the dividend allowance in 2018 from £5,000 to £2,000. 


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Fiona Hotston Moore

Fiona Hotston Moore

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