Challenges facing professional service providers

Professional Service Providers are set to face a number of challenges in the near future with changes in the following areas-

  • Changes to taxation on property in come profits
    • Restricted relief for finance costs to the basic rate of income tax
    • Landlords no longer able to deduct all financial costs from property income to arrive at property profits
    • Instead- landlords will receive a basic rate reduction from their income tax liability from their finance costs
    • Gradually introduced from 2017-21. Restricted by 25% in 2017 to 100% in 2021
  • Changes to the way dividends are taxed
    • Effective from April 2016
    • No tax on the first £5000 dividend allowance
    • Anything above £5000 will be then be taxed as follows-
      • 7.5% on dividend income within the basic rate band
      • 32.5% on dividend income within the higher rate band
      • 38.1% on dividend income within the additional rate band
    • Dividends within your allowance still count towards your basic or higher rate bands, and may therefore affect the rate of tax you pay on dividends you receive in excess of the £5000 allowance.
  • Proposed changes to benefits in kind
    • Abolition of the threshold for the taxation of benefits in kind for employees who earn at a rate of less than £8,500 a year- all employers will need to complete a P11D form unless they intend to use ‘voluntary payrolling’
    • A system of collecting income tax in real time through the ‘payrolling’ of benefits in kind- Benefits will be deducted through payroll rather than a tax code
    • Replacement of the expenses dispensation regime with an exemption for paid and reimbursed expenses- Businesses will now have to determine the correct tax treatment for these expenses and whether a matching deduction is due.

Although there are always a vast amount of changes in each sector, above are just a few changes happening soon.

With the help and advice from Chapman Robinson and Moore you can rest assured that we will do everything we can to help minimise disruption with the running of your business, and help protect your money.

If you want to find out a number of solutions to these changes just give us a call, we would be delighted to assist. Our specialist knowledge and awareness helps provide tailored advice to our clients. We are of course one, so would be delighted to share what we do.

For more details and a no obligation discussion, please contact us on 01865 379272