Budget news – Autumn Statement 2017

Budget news – Autumn Statement 2017

Budget summary –  November 2017

Was there any good news from Chancellor Hammond?

Subject to any more Elections! this should be the only Budget and announcement of tax changes for 12 months. When Phillip Hammond delivered his Budget Statement last March he explained that the next and future Budget Statements will be delivered annually each Autumn.  The Finance Bill will be introduced following the Budget so that Parliament scrutinise tax changes before the tax year where most take effect. The aim will be to reach Royal Assent in the Spring, before the start of the new tax year on 06 April 2018.

 “I report today on an economy that continues to grow, continues to create more jobs than ever before and continues to confound those who seek to talk it down.”

Victor Stanton, director at Anytime commented “It depends how you tell it.  Mr. Hammond almost made it sound like falling growth rates was a good thing.  Even he had to admit that our national debt is still far too high and he is not projecting a real fall for 5 years, and who knows what will change in that time with Brexit and so on.  Also, investing £44bn into the housing market over 5 years sounds great, until you realise that the “call” was for £50bn.  On the plus side, he has not followed up last years IR35 attack on public sector workers and is reviewing this further rather than extending it in the private sector.  Let’s hope commonsense prevails there.”

Key factors for SME’s and contract workers

 

Stamp duty land tax

The Chancellor announced a relief from stamp duty land tax (SDLT) for first-time buyers. The relief will apply from 22 November 2017 to purchases of residential property for £500,000 or less, provided the purchaser intends to occupy the property as their only or main residence. First-time buyers purchasing their first home for £300,000 or less will pay no SDLT, saving £5,000.  Where the purchase price is over £300,000 but does not exceed £500,000 they will pay 5% only on the amount above £300,000.

Dividend tax and corporation tax

Dividends will be taxed further by reducing the dividend nil rate tax band from £5,000 to £2,000 in April 2018.  Against this Corporation Tax has been reduced so far from 28% in 2010 to 19% and will go down to 17% in 2020.  For many people working through their own limited company, there will be little change from 2010 to 2020.  All the changes have done is amend the way in which the total tax is calculated.  But of course, the headline rate of CT is reduced to 17% – which looks good for the Government.  But if you receive dividends and all things are the same, you will probably pay some more tax next year than you did last year.

 Personal allowance and higher rate threshold increased

 The personal allowance – the amount you earn before you start paying income tax – will rise from £11,500 to £11,850 for 2018/19. And the higher rate threshold will increase to £46,350.  According to the Chancellor, this means that in 2018-19, a typical taxpayer will pay £1,075 less income tax than in 2010-11.

 VAT threshold fixed for 2 years

 Contrary to rumours the Chancellor did not reduce the VAT threshold which has been frozen for two years at the current £85,000 registration limit.

 Changes to National Insurance

 On 2 November 2017, the government announced a one year delay to the abolition of Class 2 NICs. Class 2 NICs will now be abolished from 6 April 2019.  This affects self-employed people, but not if your income is through a limited company.

 IR35 and “workers”

The government reformed the off-payroll working rules (known as IR35) for engagements in the public sector in April 2017. A possible next step would be to extend the reforms to the private sector, to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company.  It is good to note that the government has agreed to “…..carefully consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms….”

The government will publish a discussion paper as part of the response to Matthew Taylor’s review of employment practices in the modern economy, exploring the case and options for longer-term reform to make the employment status tests for both employment rights and tax clearer. Again it is important and pleasing to note that “The government recognises that this is an important and complex issue, and so will work with stakeholders to ensure that any potential changes are considered carefully.”

We will keep our clients advised on developments in this area.

Making Tax Digital

The MTD project has been deferred for at least a year.  MTD cannot be ignored as it will affect the way many businesses record and report for accounts and tax purposes.  As this does not have an immediate impact we will cover this in more details in future advice as details become clearer.

Brexit

The Taxation (Cross-border Trade) Bill, previously known as the Customs Bill, was published on Tuesday.  As we leave the EU, the Bill is aimed at ensuring that goods can move smoothly and safely in and out of the UK, and that everyone pays the right tax.  The Bill will allow the UK to set and collect its own duty on goods coming into the country and will allow the government to implement different outcomes of the EU negotiations, including an implementation period.  As we know – there is an awful lot to be agreed before 11pm UK time on Friday 29 March 2019!

 

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