We have tried to identify and highlight the key factors from the Budget, please feel to call Chris on 01522 543500 if you have any further queries.
PERSONAL TAX ALLOWANCE
From 2017-18 the allowance is set at £11,500 (previously 16/17 £11000).
The maximum amount of free personal allowance that can be transferred between spouses is increased to £1,150 in 2017-18. Couples can only make a claim if one partner has spare personal tax allowance and the other is a basic rate tax payer.
INCOME TAX RATE BANDS
The levels for 2017-18 are:
For 2017-18 – £45,000 (the UK apart from Scotland)
For 2017-18 – £43,000 (Scotland)
If your income before allowances exceeds these amounts you will be paying 40% Income Tax on the excess (this assumes that you are only entitled to the basic personal allowance).
The threshold at which the 45% rate starts is unchanged at £150,000.
For yet another year there were no changes to the basic Income Tax rate (20%), the higher rate (40%) and the additional rate (45%).
DIVIDEND ALLOWANCE TO BE REDUCED
From 6 April 2018, the tax-free dividend allowance of £5,000 is to be reduced to £2,000. Director shareholders of small companies that have adopted the strategy of minimising salary and maximising dividends will likely pay more Income Tax on their dividend income because of this change.
LIFETIME ISA’S – (Previously Announced)
From April 2017 any person aged 18-40 will be able to save into a new Lifetime ISA. Up to £4000 can be saved each year and savers will receive a government bonus of 25% on this money. Some or all of the money can be used to buy a first home, or it can be kept until age 60.
Accounts will be limited to one per person rather than one per home, so two first time buyers can both receive a bonus when buying together. If a saver has a Help to Buy ISA it can be transferred into the Lifetime ISA in 2017, or savers can continue saving into both, but it will only be possible to use the bonus from one to buy a house.
After your 60th birthday you can take out all the savings tax-free. You can withdraw the money at any time before you turn 60, but you will lose the government bonus (and any interest or growth on this). You will also have to pay a 25% charge.
CAPITAL GAINS TAX (CGT) REDUCTION
There are no changes to the basic CGT rates for 2017-18. The CGT on the disposal of chargeable assets, apart from residential property, remains at:
- 10% on disposals that form part of the basic rate band.
- 20% on disposals that form part of the higher rate band.
The higher rates (18% and 28%) will continue to apply to disposals of residential property subject to this tax and carried interest. Gains on a disposal of your home will continue to be exempt. The annual exempt amount for 2017-18 is £11,300 (2016-17: £11,100).
CORPORATION TAX RATE
The main rate of Corporation Tax from 1 April 2017 will be reduced to 19%. A further reduction has been announced to 17% from 1 April 2020.
BUSINESS RATES REDUCTION
In response to the negative publicity regarding increases in business rates in England, particularly for retailers, the Chancellor has stepped in with help for smaller businesses.
There are three areas of relief announced:
- Small businesses that find they are losing Small Business Rates Relief from April 2017, will have any annual rates increase capped at the higher of £600 or the transitional relief cap.
- Local authorities will be funded to provide an element of discretionary relief, and
- Public houses with a rateable value of up to £100,000 will benefit from a fixed £1,000 business rate discount – subject to State Aid limits if multiple properties are owned. This discount is available for one year from April 2017.
NIC INCREASES FOR THE SELF-EMPLOYED
To narrow the perceived imbalance in NIC charges for the employed and self-employed, it was announced that the following increases in the self-employed Class 4 NIC contributions would be implemented.
- From April 2018, an increase from 9% to 10%, and
- From April 2019, a further increase from 10% to 11%.
The earlier increase is timed to coincide with the cessation of Class 2 contributions
ISA LIMIT FROM APRIL 2017
The ISA savings limit for 2017-18 is confirmed as £20,000.
MAKING TAX DIGITAL
The Chancellor announced a one year deferral from Making Tax Digital for Business for unincorporated businesses and landlords with turnovers below the VAT threshold. This means that businesses, self-employed people and landlords with income of less than the VAT threshold will not have to start quarterly reporting until 2019.
CHANGES TO TRADING AND PROPERTY INCOME ALLOWANCES
The two previously announced £1,000 tax-free allowances for small scale trading or letting will still be introduced from April 2017, but will now include restrictions if the income or rents are generated by dealings with companies or partnerships of which the recipient is a participator or partner.
VAT REGISTRATION AND DE-REGISTRATION LIMITS
From 1 April 2017:
- Registration threshold increases to £85,000
- Deregistration threshold increases to £83,000
NATIONAL MINIMUM WAGE – NEW RATES FROM 1st APRIL 2017
National Minimum Wage Rate will now change every April starting April 2017. The rates from 1 April 2017 will be:
- £7.50 per hour – 25 yrs old and over
- £7.05 per hour – 21-24 yrs old
- £5.60 per hour – 18-20 yrs old
- £4.05 per hour – 16-17 yrs old
- £3.50 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.
Auto Enrolment is just around the corner for many of you, and yet for some you are well into the throes of processing this already. Here at Chris Rooke Management Ltd we can meet all of your payroll needs from:
- Pension setups (suitable for auto enrolment)
- Staff Presentations on Auto Enrolment if required
- Letters to employees on Auto Enrolment
- All relevant submissions in line with the pension regulator
- We also offer a full payroll service, weekly, fortnightly, 4 weekly and monthly
For all payrolls we process our Payroll Manager Jane will be in contact to ensure that all your regulatory requirements are met. For further information please do not hesitate to contact Jane on firstname.lastname@example.org