It has been announced that corporation tax will be cut within the next few years by the government. This might seem a good thing for business owners and it is, but beware of stealth taxes that might be unknowingly costing you money within your business.
Stealth taxes come in many forms are usually unnoticed or not even recognised as a tax. We’ll be looking at some of the most common stealth taxes and how they could be costing you more money that you think.
So what stealth taxes could you be paying?
Nowadays everyone has to have insurance on their car by law, but did you know you have to pay insurance premium tax as a replacement for VAT?
Although this tax does not apply to business insurance such as on vans and lorries it will increase your personal car insurance cost. If you own a car that you use to travel to and from work then this could be costing you extra without realising.
The rate of insurance premium tax is set to increase to 10% in October 2016 from its current rate of 9.5%. Even though it might not sound a big deal it’s important to factor this into your expenses and plan for an increase in costs for your insurance.
Sugar / Candy Tax
If you enjoy a fizzy drink with your lunch or whilst on your break then watch out as you could be in for a shock. From 2018 the government is planning to introduce a sugar tax for drinks. The tax will be in two tiers with 5g of sugar per 100ml and another tier for those with more than 8g per 100ml.
Most likely this added tax will be passed on to the consumer from the supplier. So if you consume any fizzy drinks during your lunch or breaks you could see your daily lunch bill go up. The only good news from this is that it won’t apply to chocolate, so for all you chocolate lovers you’re safe… for now. The best way to avoid this increase is to avoid the sugary drinks altogether and maybe switch to water or something similar instead. There’s always the no sugar option! So why not save money and be healthier?
If you’re a landlord or planning on buying a second house in general then from the 1st of April this year you’ll have to pay an extra 3% on second home purchases.
This tax although it doesn’t sound relevant to many businesses will affect landlords who run their own business. Any landlords or real estate companies looking to add properties to their portfolios will have to pay this tax.
Originally you only had to pay stamp duty on the value of the house over £125,001 at a rate of 2%. Now you have to pay 3% on the initial £125,000 and then an additional 3% on the cost over £125,001 which now totals 5%.
To put this into perspective on a house that costs £220,000 you would originally have to pay £1,900. Now after the increase in stamp duty this figure has increased to £8,500. It’s a fairly hefty increase but since this is only applicable on additional homes you won’t see a major increase if you’re a first time buyer.
Although none of these taxes covered are direct taxes, they will most likely all affect you in some way.
If you need help with your personal or business finances then we can help you. We offer a large range of business and personal tax solutions to suit your every need. Contact us below for a free consultation on how we can help improve your finances.