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AS2022 (5): Change to dividend allowance is bad news for freelancers
by The Editor at 15:51 18/11/22 (Political News)
The hidden misery for contractors and freelancers in the Autumn Statement was the announcement that the dividend tax thresholds will be reduced from £2,000 to £1,000 in April 2023, before halving again, to £500 in April 2024.
Self-employed group, IPSE, pointed out that a key group affected by the measure would be freelancers working through limited companies, who were excluded from support during the pandemic, will soon be hit by the increase in corporation tax, have only recently seen tax on their dividends increase and who are plagued by the highly damaging changes to the IR35 rules.

Andy Chamberlain from IPSE said: “After the financial damage of the pandemic, exclusion from support, the changes to IR35 taxation, the recent tax hike on dividends and the impending corporation tax hike, this latest attack is further salt in the wound for anyone working through their own company.

“The Government is making it harder and harder for those who work for themselves. Of course we need to raise tax to pay for vital public services, but time and again it seems our very smallest businesses are the first targets.

"We’ve already seen the number of self-employed fall dramatically since the pandemic – the government seems intent on reducing that number further.

"By slashing the dividend allowance, the Government has once again demonstrated that it does not support small business.”

The Government announcement following the Chancellor's statement clarified the position:
Dividend Allowance and Capital Gains tax Annual Exempt Amount - The Government will reduce the Dividend Allowance from £2,000 to £1,000 from April 2023, and to £500 from April 2024, and reduce the Capital Gains Tax Annual Exempt Amount from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024. These measures will raise over £1.2 billion a year, from April 2025. The government will legislate for these measures in Autumn Finance Bill 2022.

Autumn Statement 2022
For more information and expert analysis on issues relating to freelancers, contractors and small businesses in the Autumn Statement see Shout99's Political News section.

Further IR35 information
For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section.

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The Editor

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