The Chancellors fourth Budget in 12 months arrived on Wednesday and it confirmed a number of policy changes that we already knew were going to arrive. Restrictions on Travel and Subsistence tax relief for IR35 contractors and changes to the dividend tax will take effect as planned in April.

The most significant new announcement will be of concern to contractors working through a personal service company (PSC) in the public sector.

An HMRC policy document reveals that from April 2017, public sector organisations will be responsible for enforcing IR35. This marks a significant change from the current system, whereby the PSC or agency judges whether a contractor is caught out by IR35.

Effectively, this means that many more public sector contractors will fall under the remit of IR35 legislation and will receive less take home pay as a result. This change is scheduled to take effect in April 2017 following a consultation. 

A new report has recommended that income tax and national insurance contributions (NICs) should be brought closer together in order to make a tax system that is fit for the future.

However, some fear that the exercise in simplification could lead to a system of winners and losers, with some paying more in taxes and others paying less.

One of the biggest losers under the new system is likely to be some self-employed people, who benefit under the current system of NICs.

The report from the Office of Tax Simplification (OTS) lays out a seven-stage programme for bringing national insurance more in line with income tax.

The headline recommendation is for NICs to be paid on an annual, cumulative and aggregate basis, instead of the current system where NI is calculated weekly or monthly. 

New National Minimum Wage regulations will take effect on April 1^st and all employers will be required to meet them.

The National Living Wage will apply to employees aged 25 and over and it will essentially mean that employers will have to pay their staff an extra 50 pence per hour, with the rate set at £7.20.

The requirement could put many small and medium sized business owners in a difficult position, particularly if they operate in the margin-conscious retail sector or employ a lot of minimum wage employees.

The way that dividend income is taxed for company owners is changing in April. The abolition of the Dividend Tax Credit and the introduction of a tax-free Dividend Allowance will have positive or negative consequences depending on your situation.

It is important that you are aware of – and prepared for – the upcoming changes.

For many small and medium sized company owners, receiving dividends tends to be a more tax efficient means of income than receiving a salary. But this advantage will reduce after April.