Budget 2015 – Small Business / Landlord / Non Dom tax changes

Below I have highlighted three of the many areas of change announced in yesterday’s budget.

  1. Changes to the Taxation of dividends

From April 2016 dividends will be subject to further income tax at 7.5% above £5000 for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate 45% taxpayers. For a small business owner paying himself a small salary of £10,000 and dividends of £32,000 there would be extra personal income tax payable of £2025.00.

This is partly offset by the reduction in the company tax rate to 19% in 2017 and then 18% in 2020.

  1. Abolition of Goodwill write-down.

For purchases of goodwill – customer lists / business reputation etc the amortisation of goodwill is abolished for purchases after budget day.

This will change the way many small business owners consider purchasing a business as now a large part of it will not qualify for tax relief.

  1. Changes in the Taxation of property income

Higher rate relief on interest paid to buy or improve a property will be restricted to the basic rate of tax. This will be withdrawn over a four-year period from 2017.

Also the wear and tear allowance to cover depreciation of soft furnishings and white goods currently 10% of gross rents will be abolished from April 2016.

  1. Changes to non Domicile status

Individuals who have been resident in the UK for more than 15 out of the past 20 tax years will be treated as deemed UK domiciled for all tax purposes from April 2017.

There is also consultation on the taxation of non-domicile individuals who leave UK and then return.

GeneralKaty Carlisle