‘Someone has to pay – this time it’s the self-employed’

acknowledged the contribution of the tax system to the increase in numbers of self-employed people operating through a limited company, and the resulting impact on tax revenues.

The £5,000 dividend allowance introduced to smooth the effect of withdrawing the 10 per cent tax credit will therefore be reduced to £2,000 from April 2018.

Might we even see this abolished in the future and dividends subject to income tax, particularly for shareholders who are directors?

Although changes to National Insurance and the dividends allowance are set to generate a whopping £3.7 billion over five years for the UK government, the bad news for Scotland is that Holyrood will not benefit from these changes, as neither of these measures are not devolved to Scotland.

However, the Chancellor did set out plans to tackle issues with social care and education, and provide some relief from the forthcoming increases in business rates which has led to increased investment.

Although these areas are reserved to Westminster, Scotland will still benefit from the increases through the Barnett Formula Consequentials – to the tune of £350 million, in this case.

Someone always has to pay – this time it’s the selfemployed. l Stephen Hay is tax partner at accountant and business adviser RSM