It’s important that small businesses are aware of changes this coming tax year and beyond.
According to ICAEW, small businesses face a heavier administrative burden after 6 April 2016. Perhaps the most difficult change is auto-enrolment which requires all businesses to provide a workplace pensions scheme for employees or face a penalty notice. The scheme is now being rolled out to smaller businesses, many of whom will have staging dates throughout 2016-2017. The other change that may cause implementation problems relates to the way dividend income is taxed. From April 2016, each taxpayer will receive an annual £5,000 tax-free limit for dividend income. Dividend income of over £5,000 (and after using up any remaining personal allowance) will be taxed at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for those on the highest incomes who pay additional rate income tax.