Latest Article: 2016 Autumn Statement Overview
Posted by: Matt on Nov 29, 2016
By Steve Blissett
During the Autumn Statement last week, Philip Hammond made some announcements that will have implications on individuals and personal tax, businesses and company tax, and employers. This is an overview containing details on IR35, VAT and corporation tax, as well as any other changes that may have escaped your attention.
Individuals and personal tax
- The personal allowance will increase next year to £11,500 up £500
- The higher rate threshold will increase to £45,000 up £2k
- The tax advantages linked to shares awarded under employee shareholder status (ESS) are to be abolished
- The government will create two new income tax allowances of £1,000 each, for trading and property income. Individuals with trading income or property income below the level of the allowance will no longer need to declare or pay tax on that income
- The ISA limit will increase from £15,240 to £20,000 from 6 April 2017
- Significant reforms to the taxation of individuals domiciled outside of the UK will go ahead from April 2017
- Class 2 NICs (payable by the self-employed) will be abolished from April 2018
Businesses and company tax
- Corporation tax will be reduced to 17% by 2020
- Rules will be introduced to limit tax deductions for corporate interest expense from April 2017
- Changes to simplify the substantial shareholding exemption rules will be brought in from April 2017
- A new 16.5% VAT flat rate from 1 April 2017 will be introduced for businesses with limited costs, such as many labour-only businesses
- Reform of tax relief for historic losses will be brought in
- Reform of business rates will be brought in
- The tax and employer National Insurance contributions advantages of salary sacrifice schemes will be removed from April 2017. The only exceptions being arrangements relating to pensions (including advice), Cycle to Work, childcare and ultra low emission cars.
- The IR35 rules will be amended from April 2017 where services are provided to the public sector, moving the responsibility to decide whether PAYE and national Insurance contributions are due to the payer of the personal service companies.
- The government will extend the scope of the disguised remuneration scheme changes to tackle the use of these schemes by the self-employed.
- New rules will be brought in to deny tax relief for an employer’s contributions to disguised remuneration schemes unless tax and National Insurance are paid within a set period.
- From April 2017 employees will have to pay their employers any sums that will reduce the taxable value of benefits in kind by 6 July following the tax year.
- The government will consider the way in which benefits in kind are valued for tax purposes and will issue a consultation document about the valuation of living accommodation.
- The government will review tax relief on employees' business expenses.
- The National Insurance contributions secondary (employer's) threshold and the National Insurance contributions primary (employee's) threshold to be synchronised from April 2017, so both employees and employers will start paying National Insurance on weekly pay above £157.
- The government is going to simply the PAYE Settlement Agreement process for 2018/19 onwards.
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