April's tax changes: a freelancer's overview
Several key changes for freelancers and freelancing came into force this month, further to other changes which may affect you due to the new tax year. The big changes are as follows:
· A new system of tax rates for dividends in excess of £5,000.
· Removal of tax relief on travel and subsistence expenses for ‘Supervised, Directed or Controlled’ umbrella company users and IR35-caught freelancers/contractors.
· Removal of National Insurance Employment Allowance for one-person companies.
· New digital personal tax accounts from HMRC (on an introductory basis).
· Other updated publications include Self-Assessment helpsheet if you’ve got more than one business; the rules for Claiming Entrepreneurs’ Relief and What to do if IR35 applies
· The thresholds for registering for VAT (more than £83,000) or joining a VAT accounting scheme such as the Flat Rate Scheme (£150,000 or less), have been updated.
· Lower rates of Capital Gains Tax are now in effect, but the reductions do not apply to residential property sales of second homes or buy-to-let properties.
· ISAs are now more flexible, as some holders will soon be allowed to take money out of their account and replace it, without using up any of their tax-free annual allowance -- providing they do so in the same tax year. However some providers have already said they will not offer this new flexibility for ISAs, which can now hold a maximum of £15,240 (rising to £20,000 in 2017).
· A new £1,000 tax-free allowance for savings income has taken effect.
· The £10,600 tax-free personal allowance has notched up to £11,000 (for tax year 2016-17).
10th April 2016