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Although very little specifically was mentioned about the motor trade in the budget, it was a big budget with lots of different changes that will affect the motor industry.
For those of you that are limited companies, the government is reducing the main rate of corporation tax to 19% in 2017 and 18% in 2020. This will be somewhat, if not entirely, negated by the changes to the taxation of dividends, as the government is effectively increasing the tax rate on dividends to 7.5% for basic rate taxpayers and 32.5% for higher rate taxpayers.
The government is reforming Vehicle Excise Duty (“VED”). Any cars first registered from 1 April 2017 will fall under the new regime. In the first year of registration, the VED will vary according to the CO2 emissions of the vehicle. From the second year onwards, a flat standard rate of £140 will apply to all vehicles with emissions over zero. Any zero-emission cars will not be charged VED. Any cars with a list price of over £40,000 will attract a supplement of £310 on the standard £140 rate. Any cars registered pre 1 April 2017 will remain in the current VED system which will remain unchanged.
Lastly, for those of you looking to purchase other trades, the government is abolishing the tax relief on purchased goodwill so you won’t get tax relief until you sell the trade.
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