24/11/2016
Autumn Statement 2016: key tax measures: The Chancellor showed his intention to downgrade the Autumn Statement by keeping tax changes in this one to a minimum. He will continue the intention to lower corporation tax rate to 17% for financial year 2020, and the favourable regime for the oil and gas industries. Some interesting developments as follows
•
the intention to align employer and employee NIC thresholds from April 2017;
•
a personal allowance of £12,500 and higher rate threshold of £50,000 by 2020;
•
a review of non-cash payments by employers to their employees; and
•
the introduction of 100 per cent first year allowances for electric car charge-points.
For Scottish connections - the Scottish government will be delivering its Budget on 15 December.
Interesting developments concerning:
Income tax and National Insurance contributions
Personal allowance and higher rate threshold
The Government has announced it will meet its commitment to raise the income tax personal allowance to £12,500 and the higher rate threshold to £50,000, by the end of this Parliament. Next year, the personal allowance will rise to £11,500 and the higher rate threshold to £45,000. Increases to the personal allowance over the last Parliament took 4 million of the lowest paid out of income tax altogether.
Once the personal allowance reaches £12,500, it will then rise in line with Consumer Prices Index as the higher rate threshold does, rather than in line with the NMW. This will lock in the increases the Government has made to the personal allowance over the past six years, so they are not eroded by inflation, while increasing the sustainability of the public finances in the long term.
New tax allowance for property and trading income
As announced at Budget 2016, 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 trading income allowance will now also apply to certain miscellaneous income from providing assets or services.
Charity tax
Gift aid digital
As announced at Budget 2016, the Government will give intermediaries a greater role in administering Gift Aid, simplifying the Gift Aid process for donors making digital donations.
Pensions and savings tax
As previously announced, the ISA limit will increase from £15,240 to £20,000 in April 2017.
Starting rate for savings
The band of savings income that is subject to the 0% starting rate will remain at its current level of £5,000 for 2017-18.
Non-domiciled individuals
The government has stated that individuals who live in the UK and make use of public services should pay their fair share of tax. The following reforms to the taxation of non-domiciled individuals make the tax system fairer for everybody:
•
as previously announced, the Government will end the permanency of non-domiciled tax status. From April 2017, non-domiciled individuals will be deemed UK-domiciled for tax purposes if they have been UK resident for 15 of the past 20 years, or if they were born in the UK with a UK domicile of origin. Also as previously announced, non-domiciled individuals who have a non-UK resident trust set up before they become deemed-domiciled in the UK will not be taxed on income and gains arising outside the UK and retained in the trust.
•
from April 2017, inheritance tax will be charged on UK residential property when it is held indirectly by a non-domiciled individual through an offshore structure, such as a company or a trust. This closes a loophole that has been used by non-domiciled individuals to avoid paying inheritance tax on their UK residential property
•
the Government will change the rules for the Business Investment Relief (BIR) scheme from April 2017 to make it easier for non-domiciled individuals who are taxed on the remittance basis to bring offshore money into the UK for the purpose of investing in UK businesses. The government will continue to consider further improvements to the rules for the scheme to attract more capital investment in British businesses by non-domiciled individuals.
Corporation tax rates
The Government reaffirmed its commitment to its business tax roadmap which means that previously enacted corporation tax rate reductions remain as follows:
•
Financial year 2017 - 19%
•
Financial year 2018 - 19%
•
Financial year 2019 - 19%
•
Financial year 2020 - 17%
This information and much more including the Autumn Statement in full can be found by going to www.hmrc.gov.uk
We are the UK’s tax, payments and customs authority, and we have a vital purpose: we collect the money that pays for the UK’s public services and help families and individuals with targeted financial support. We do this by being impartial and increasingly effective and efficient in our administratio...
