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
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
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