The recent Autumn Statement has been released and it introduces certain changes that will have an impact on everyone. However, we should bear in the mind the uncertainty of what BREXIT will bring to us in the near future. A summary of the key changes are noted below:
Personal Tax
- Personal allowance increasing to £11,500 from 2017-18
- Higher rate threshold increasing from £43,000 to £45,000 in 2017-18. The Scottish rate higher rate threshold may remain at £43,000
- The threshold at which employees and employers will start paying National Insurance on weekly earnings is being aligned at above £157
- Class 2 NIC will be abolished from April 2018
- From April 2018, termination payments over £30,000 which are subject to income tax, will also be subject to Employer National Insurance.
- Tax on termination pay will only be applied to the equivalent of an employee’s basic pay if their notice period is not worked.
Benefit-in-kind
- Tax and NIC advantage of salary sacrifice schemes to be removed from April 2017 except for pensions, childcare, Cycle to Work and ultra-low emission cars. Most common benefits therefore now taxable e.g. mobile phones and free gym passes etc. Arrangements in place prior to April 2017 will be protected to April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021.
- Consultation to take place on valuing employer provided accommodation for tax purposes
- Government to publish call for evidence at Budget 2017 for income tax relief on employee’s business expenses including those not reimbursed by employer.
Business Tax
- From April 2017, Limited Company Contractors working in the public sector will see the shift of responsibility to the “Body” paying the worker’s company, for ensuring that the correct taxes are paid. Should IR35 apply, the 5% tax-free allowance has been removed for those working in the public sector.
- Corporation tax rate will be cut to 17% by 2020
- Limits on interest expense deductions for large companies, where net interest expense exceeds £2 million, net interest expense exceeds 30% of UK taxable earnings and Group’s net interest to earnings ratio in UK exceeds the worldwide group.
- Loss relief to be restricted by only allowing 50% of profits to be offset from April 2017. The restriction will be subject to £5 million allowance for each company.
- Consideration of bringing all non-resident companies receiving taxable income from the UK into corporation tax regime.
- Upcoming changes to simplify the investing requirement rules for the Substantial Shareholding Exemption.
- Government to introduce a new 16.5% flat rate from 1 April 2017 for businesses using the Flat Rate Scheme with limited costs, such as many labour-only businesses.
Rental Business
- Two new income tax allowances of £1,000 each for trading and property income. Individuals with trading or property income below this allowance no longer need to declare or pay tax on that income
Pensions and Savings
- ISA limit changing from £15,240 to £20,000 in April 2017
- Starting rate of tax for savings to remain at 0% for the first £5,000
- Money Purchase Annual Allowance to be reduced from £10,000 to £4,000 from April 2017
- Tax treatment of foreign pensions to be more closely aligned with UK domestic pension regime by bringing them into UK tax regime for UK residents.
Non-domiciled individuals
- From April 2017, non-domiciled individuals will be deemed UK domiciled for tax purposes if UK resident for 15 of the past 20 years, or if they were born in the UK with a UK domicile of origin.
- Inheritance tax on UK residential property held indirectly by non-domiciled individuals through an offshore structure
Other
- Government looking to simplifying Gift Aid process for digital donations
- Tax advantages of shares awarded under Employee Shareholder Status abolished from 1 December 2016
- UK taxpayer investing in offshore reporting funds pay tax on their share
- Fuel duty to remain frozen
- Company car tax lower bands to be introduced for lowest emitting cars
- Insurance Premium Tax increasing to 12% from 1 June 2017
- Government to publish response to “Making Tax Digital” consultations
Please contact us to discuss the Autumn Statement In detail.