The main rate of self-employed National Insurance contributions (NICs) will increase
Currently, the self-employed may have to pay both Class 4 and Class 2 NICs. Class 4 NICs at 9% are paid on profits between £8,060 and £43,000 Class 2 NICs are paid on profits of £5,965 or more. From 2018, Class 2 NICs will be abolished. Class 4 NICs will rise to 10% in April 2018 and to 11% in April 2019. Taken together, only a self-employed person with profits over £16,250 will have to pay more as a result of these changes.
Tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018
This will reduce the tax difference between the self-employed and those working through a company.
Here, we list the key deadlines to bear in mind so you can ensure your 2016-17 tax return is submitted on time. There are two ways to submit your tax return. You can either send a paper tax return to HMRC or fill in an online tax return.
Our advice: do not leave it to last minute in January!
From April 2017, there will be changes affecting businesses with a very low-cost basis. These businesses will now be classed as “limited cost traders” if they spend:
A business that is deemed as a “limited cost trader”, should apply a new rate of 16.5% to their VAT inclusive turnover to calculate their VAT liability, instead of applying the fixed percentage based on your trade or profession. For example, a typical IT contractor, currently on a fixed flat rate of 14.5%, this, of course, means an increase of 2%. Note, that if you are in the first year of the Flat Rate Scheme a further 1% discount still applies.