A lot of the changes that are coming in really are more about business owners and businesses as a whole, states Harding. Therefore, starting in April, the dividend rate—the amount that businesses pay to their shareholders—will increase by 2% for those who profit from operating their own business. The higher rate will increase to 35.75%, while the basic rate will increase to 10.75%. The dividend allowance, which was lower in prior tax years, remains at £500. So let’s see what transpires there.
Increasing the Minimum Wage Nationally
For those who work for the federal minimum wage, this is good news. For those under the age of eighteen and apprentices, the National Minimum Wage will increase from £7.55 to £8 per hour. It will increase from £10 to £10.81 for those between the ages of 18 and 20. It will increase from £12.21 to £12.71 for those who are 21 years of age and older. Harding says, “It’s really important that you get that raise because, even with that raise, that amount of money is really hard for most people to live on.”
Relief for Commercial and Farm Property
A 20% inheritance tax will be imposed on anyone who owns business or agricultural property valued at more than £2.5 million as a result of the government’s desire to limit reliefs. Those impacted “might want to review wills or structure assets to take that into account,” according to Harding. “If you have £2.5 million in business or agricultural property, you’re probably doing pretty well for yourself,” people would likely say. Harding continues, “This will probably only affect a small number of people, but people who work in farming will be very upset and uncomfortable.”
Relief from Business Asset Disposal (BADR)
“The Government will raise the Capital Gains Tax for qualifying proposals to 18% (up from 14%) for leaving a business, but there will still be a million-pound limit,” Harding states. “There will be a lot of tax when you’re talking about large sums of money.” “It’s really people with a lot of money who will be affected; the average person probably doesn’t have a million pounds in business assets,” she continues. This has to do with the inheritance tax on Qualifying Alternative Investment Market Shares. The current 100% relief “is going to decrease by 50%, so it’ll be a permanent 20% inheritance tax liability, and they’re frequently used as vehicles to help mitigate inheritance tax for individuals who have a high amount of assets.”
Making Taxes Online
“Making Tax Digital means more life admin for people and a bit less for HMRC,” Harding remarks sarcastically. In essence, this new system mandates that landlords and sole proprietors with gross income profits of £50,000 or more submit their income tax returns. In April 2027, this sum will drop to £30,000. Every three months, those who fit the requirements must submit their work online. Check Gov.uk to see if you need to register.
