Budget 2017 – What it means for Professional Practices
Posted On March 8, 2017 By mhauk
A common business structure for a professional practice is a traditional partnership or an LLP. This is the case even though using a company typically reduces the tax payable on the income of the practice.
The 2017 Spring Budget has brought in increases to the rate of Class 4 National insurance contributions (NIC’s) from 9% to 10% from April 2018 and then to 11% from April 2019, which swings the pendulum further towards incorporation. This is balanced to some extent by the reduction in the 0% dividend allowance from £5,000 to £2,000, meaning that more tax will be payable on dividends from a company.
The increased use of growth shares as a means of facilitating succession takes away some of the concerns about companies and the perceived difficulties that they cause in relation to succession.
Successive Chancellors have talked about the tax benefits of incorporation without removing those benefits. Given the increased national insurance for self employed persons, now would be a good time for professional practices to review their business structure.
If you have any questions or would like to discuss this in more detail, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Professional Practices team.