Posted by Tax Innovations on 24 Nov 2017

Autumn Budget 2017

On 22 November 2017, Philip Hammond gave his first Autumn Budget as Chancellor. The main tax announcements are set out below.

It was another speech constrained by poorer-than-expected growth, so contained few surprises (and many jokes); However, there were a few tax changes of note for our clients.

A brief overview of the tax announcements made in the 2017 Autumn Budget is as follows:

Personal Tax

  • The personal allowance will increase to £11,850 from 6 April 2018, and the higher rate threshold will increase to £46,350, increasing the basic rate band by £1,000.
  • The lower earnings limit for Class 1 National Insurance purposes will increase to £116 per week, the primary and secondary thresholds to £162 per week and the upper earnings limit, upper secondary threshold and apprentice upper secondary threshold to £892 per week.
  • The reform of Class 2 and Class 4 National Insurance is delayed to 2019, so for 2018/19 Class 2 contributions will be £2.95 per week where profits exceed the small profits threshold of £6,205. Class 4 contributions will be 9% on profits between £8,424 and £46,350, and 2% on profits in excess of £46,350.

Employment

  • HMRC announced a consultation in respect of extending the recently introduced rules for public sector contract workers to private sector workers, meaning that the contracting company will decide whether IR35 applies, and if so, operate PAYE on the payments under the contract.

Business Tax

  • From April 2018, business rates will increase in line with the Consumer Prices Index (CPI) measure of inflation, not the higher, outdated Retail Prices Index (RPI), bringing this change forward by two years.
  • The rate of R&D expenditure credit (RDEC) under the large company scheme will increase from 11% to 12% from 1 January 2018. There was no change to the SME R&D scheme.
  • In respect of company cars, diesels were punished with higher excise duty on new cars, and the diesel supplement on car benefit rates will increase from 3% to 4% from 6 April 2018. The spread of electric cars continues to be helped with the Chancellor confirming that there will be no benefit-in-kind arising for those that charge their electric vehicles at work.

Pensions

  • For the first budget in some time, there were no significant changes to the tax system in respect of pensions.
  • The lifetime allowance is increased in line with CPI to £1,030,000 for 2018/19.
  • The pensions annual allowance remains at £40,000 and the money purchase annual allowance remains at £4,000.

VAT and Other Announcements

  • The VAT registration threshold is to be held at £85,000 and the deregistration threshold at £83,000 for two years.
  • Ominously, the Chancellor also announced that he will look into reforming the way the threshold works in order to reduce the ‘cliff edge’ effect causing businesses to trade just below the registration threshold.
  • A permanent exemption (0% rate) from SDLT for first time buyers was announced for the first £300,000 of value on properties worth up to £500,000.
  • The non-resident CGT (NRCGT) regime introduced for UK residential property from April 2015 will be extended from April 2019 to include non-residential UK property, meaning that non-UK residents will be subject to gains on non-residential properties arising after that date.
  • Indexation of CGT base costs for companies will come to an end from 1 January 2018. Such indexation has not been available for individuals for many years, so this aligns the position of companies.

If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or customerservice@taxinnovations.com.