Summary of the Main Proposals
On Wednesday 22 November the Chancellor of the Exchequer delivered his first main Autumn Budget Statement as the UK enters a critical negotiation phase of leaving the EU.
He stated that the UK economy is forecast to grow by 1.5% in 2017 but will grow at a slightly slower rate in the next three years, before picking up in 2021. Inflation is forecast to peak at 3% in the final months of 2017 but is then projected to fall towards the target of 2% over the next year.
Following the recent leak of the ‘Paradise Papers’ the Chancellor gave a commitment to tackling tax evasion and avoidance, aggressive tax planning and non-compliance, including those seeking to evade or avoid tax using offshore structures.
The Chancellor confirmed that the Welsh Government will get an extra £1.2bn over four years as a result of his Budget.
Our summary and analysis of the November 2017 Autumn Budget follows:
Income Tax Rates & Allowances
- The 2018-19 personal tax allowance is to be increased to £11,850. The personal tax allowance has now increased by 83% from its 2010 level of £6,475.
- The basic rate tax band for 2018-19 will be £34,500. This means that individuals can receive income up to £46,350 before being liable to higher rate for 2018-19. There is a continuing commitment to increase the personal allowance to £12,500 and higher rate threshold to £50,000 by the end of the current parliament.
- The main rates of income tax for 2018-19. No changes were announced to income tax rates so they will remain at 20%, 40% and, for income above £150,000, 45%. Where income is above £100,000, the personal allowance is reduced by £1 for every £2 of income over £100,000 until income reaches £123,700 when it disappears completely
- Marriage Allowance. The government will now to accept backdated claims up to 4 years in cases where a partner has died before the claim was made. The marriage allowance allows couples to transfer up to 10% of their unused personal allowance to the other spouse or partner and is worth up to £230 for 2017-18.
- Savings Income Tax Band. The 0% band of savings income is to be retained at its current level of £5,000 for 2018-19.
- The zero tax rate ‘dividend allowance’ is to be reduced from £5,000 to £2,000 from April 2018 (as previously announced).
National Insurance Contributions (NICs)
- Abolition of self-employed Class 2 NICs and other changes to NICs is to be delayed by one year until April 2019. This is to allow Parliament and stakeholders to work on the detail of eventually simplifying the National Insurance Contribution system.
- Class 4 National Insurance Contributions. As previously announced, the government will no longer proceed with an increase to the main rate of Class 4 NICs from 9% to 10% in April 2018, and to 11% in April 2019.
Personal Investments & Savings
- The overall ISA annual investment limit is to be frozen at the current level of £20,000 from April 2018.
- Junior ISAs. The annual subscription limit for Junior ISAs and Child Trust Funds for 2018-19 will be increased in line with the CPI to £4,260.
- Lifetime allowance for pensions – The lifetime allowance for pension savings will increase in line with CPI, rising to £1,030,000 for 2018-19.
Business Tax
- The rate of corporation tax is set to remain at 19% for the 2 years commencing 1 April 2018. The rate is scheduled to reduce to 17% from April 2020.
- Research and development expenditure credit – The rate of the R&D expenditure credit will increase from 11% to 12% with effect from 1 January 2018.
- Withholding tax on royalties – With effect from April 2019, withholding tax obligations is to be extended to royalty payments made to low or no tax jurisdictions in connection with sales to UK customers.
Land Taxes
- Land Transaction Tax will replace UK Stamp Duty Land Tax in Wales from April 2018.
- Stamp Duty. From 22 November 2017, ‘first-time’ buyers will be exempt from Stamp Duty on properties up to £300,000. In Wales this change will only apply to April 2018 as a new devolved LTT Tax will come into force from that date. The Welsh government will therefore have to decide whether to continue it when stamp duty is devolved in April 2018.
Capital Gains Tax
- CGT on Residential Property disposals. The introduction of a 30-day payment window between a capital gain arising on a residential property and payment is to be deferred until April 2020.
Inheritance Tax (IHT)
- The main IHT nil rate band continues to be frozen at £325,000.
- An additional ‘residence nil rate band’ (RNRB) has been available since 6 April 2017 for transfers of a main residence to direct descendants (£125,000 for 2018/19 rising to £175,000 by April 2020).
Value Added Tax (VAT)
- The VAT turnover registration threshold is to be frozen at the current level of £85,000 for the next two years from April 2018. In response to the Office of Tax Simplification’s report on VAT the government is to consult on the design of the threshold.
Motoring
- Fuel duty rise scheduled for April 2018 is to be scrapped.
- Vehicle excise duty for new diesel cars not meeting latest ‘driving standards’ to rise by one band from 1 April 2018.
- Diesel company cars. Existing benefit in kind supplement to increase by 1% to 4% from 6 April 2018 for diesel cars not meeting ‘Real Driving Emissions’.
Other Changes
- Universal Credit – The seven day waiting period for processing of claims is to be scrapped.
- National Living Wage to rise in April 2018 by 4.4%, from £7.50 an hour to £7.83
Further Advice
If you would like to discuss any of the above proposals and how they relate to your individual circumstances then please do not hesitate to email us on contact@marshvision.com or ring us on 01633 215 544
A complete library of tax tables and tax data is available whenever you need them by downloading the free Marsh Vision App onto your iOS or Android devices at www.marshvision.com
