Tax Changes You Need To Know About
If you’re self-employed there is a huge amount to keep on top of and you need to know about tax changes that might affect your business. We’ve broken down the changes that will affect you and stripped out all of the jargon!
Personal Allowance and Tax Rate Changes
Your personal allowance is what you can earn before you have to pay tax.
Last year it was £11,500. This year it is going up to £11,850. That might not sound like a big change, but it’s an extra £350 before you have to pay tax.
The higher rate of income tax started at £45,000 last year but this year is going up to £46,350. So you won’t have to pay the higher rate on the extra £1,350.
Dividends Cut Down
Last year you could take £5,000 as dividends from your company before you had to pay tax. This year it has been slashed to £2,000.
National Insurance Changes
If you are self-employed there is some good news here. Your income determines when you have to start making National Insurance contributions. Last year this was at £6,025 whereas this year it is £6,205 for Class 2 contributions. For Class 4 (higher earners) the threshold changes from £8,164 to £8424.
If You’ve Got Employees
If you’ve got employees it’s worth us mentioning that the national living wage has increased from £7.50 to £7.83, for people over 25 years of age.
The amount you’ve got to pay into your employee’s pension pot has gone up from 1% to 2%, next April (2019) it’s going up to 3%.
In the world of tax there’s a lot of jargon and confusion for the self-employed. The best way to stay on top of it all is to let someone look after the tough bits for you – leaving you time to focus on what you do best. Contact us now to discuss how we can help from just £10 a week.