Welcome to the Spring Budget 2017 edition of Tax Tips & News.
In this analysis we have mainly concentrated on the tax measures that will directly affect individuals, employers and small businesses.
We are committed to ensuring all our clients don’t pay a penny more in tax than is necessary.
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Chancellor Philip Hammond has delivered his first, and seemingly last, Spring Budget Statement. At the 2016 Autumn Statement, the Chancellor announced that, following the spring 2017 Budget, the government would be moving to a single major fiscal event each year. Future Budgets will be delivered in the autumn, which means there will now be a second Budget before the end of 2017 to switch to the new timetable. The aim of the new system is for the Finance Bill, which is normally published after the annual Budget, to reach Royal Assent stage in the spring of each year, before the start of the following tax year. The change in timetable is designed to help Parliament to scrutinise tax changes before the tax year where most take effect.
In line with pre-Budget speculation, the Chancellor said that, as the government starts its negotiations to exit the European Union, this Budget would take forward its plan to prepare Britain for a brighter future, providing a strong and stable platform for those negotiations. – read more>>
Personal allowance and income tax threshold
The personal allowance for 2017/18 is set at £11,500 (£11,000 in 2016-17), and the basic rate limit will be increased to £33,500 (£32,000 in 2016-17). The additional rate threshold will remain at £150,000 in 2017/18. The government intends to increase the allowance to £12,500 by the end of Parliament.
The marriage allowance will rise from £1,100 in 2016/17 to £1,150 in 2017/18.
Blind person’s allowance will rise from £2,290 in 2016/17 to £2,320 in 2017/18. – read more >>
Making Tax Digital for Business
The provisions for the government’s Making Tax Digital project will be legislated for in Finance Bill 2017. However, the mandatory start date for unincorporated businesses and landlords with gross income (turnover) below the VAT registration threshold will be deferred until April 2019. This means that only those businesses, self-employed people and landlords with turnovers in excess of the VAT threshold with profits chargeable to income tax and that pay Class 4 NICs will be required to start using the new digital service from April 2018.
Increasing the cash basis entry threshold
As announced in January 2017, the trading cash basis threshold for unincorporated businesses is to be increased to £150,000 for 2017/18 onwards. For Universal Credit claimants, the entry threshold will be increased to £300,000. The exit threshold will be increased to £300,000 for all users of the trading cash basis. – read more >>
VAT registration threshold
The VAT registration and deregistration thresholds will be increased in line with inflation with effect from 1 April 2017 to £85,000 and £83,000 respectively.
VAT: ‘split payments’ model
As announced at Budget 2016, the government is considering alternative methods of collecting VAT. This is in addition to the measures it has already introduced to tackle the problem of overseas businesses selling goods to UK consumers via online marketplaces without paying VAT. At Spring Budget 2017, the government confirmed that it will consult on the case for a new VAT collection mechanism for online sales. This would harness technology to allow VAT to be extracted directly from transactions at the point of purchase. This type of model is often referred to as ‘split payment’. – read more>>
Annual Tax on Enveloped Dwellings
The annual charges for the Annual Tax on Enveloped Dwellings (ATED) will rise in line with inflation for the 2017/18 chargeable period.
– Property value £500,001 to £1 million – £3,500 (£3,500)
– Property value £1,000,001 to £2 million – £7,050 (£7,000)
– Property value £2,000,001 to £5 million – £23,550 (£23,350)
– Property value £5,000,001 to £10 million – £54,950 (£54,450)
– Property value £10,000,001 to £20 million – £110,100 (£109,050)
– Property value £20,000,0001 and over – £220,350 (£218,200)
Insurance premium tax
As announced at Autumn Statement 2016 and confirmed at Spring Budget 2017, the government will legislate in Finance Bill 2017 to increase the standard rate of Insurance Premium Tax (IPT) by 2% from June 2017. It will also repeal existing anti-forestalling legislation as it is no longer required.
Soft Drinks Industry Levy
As announced at Budget 2016 and confirmed at Autumn Statement 2016, the government will legislate in Finance Bill 2017 for the Soft Drinks Industry Levy. The two thresholds, at 5g and 8g of sugar per 100ml, have been designed so that, by taking reasonable steps to reduce sugar content, UK producers and importers of soft drinks can pay less or escape the charge altogether. The rates were announced at Spring Budget 2017 and will be 18 pence per litre (ppl) for the main rate and 24ppl for the higher rate. The levy will take effect from April 2018 and evasion of it will be a criminal offence.