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AUTUMN BUDGET 2017

Last week the Chancellor presented his first Autumn Budget. This is a move away from the traditional budget which used to be in the Spring. The idea is that there will be more time to consider the implications and changes before the new tax year starts in April. This does seem sensible. There were not a lot of announcements that will impact directly onto businesses but I set out some key points below.

Taxation

Income tax – from April 2018, the personal allowance will increase to £11,850, with the basic rate tax band of £34,500; higher rate tax threshold will be £46,350.

The starting rate tax band remains at £5,000 for savings income. The rates of income tax remain unchanged.

From April 2018 employees will not be subject to a benefit in kind charge where their employer provides electricity to charge employees’ cars.

The government will also consult on the tightening of IR35 provisions for contractors and may extend what they have done in the public sector to the private sector.

Corporation tax – indexation allowance for capital gains for corporates will be frozen from 1 January 2018, although indexation relief will continue to apply for disposals after 22 November until 31 December 2017. We are currently working through the implications of this and will provide an update in due course.

Capital Gains Tax – the Capital Gains Tax annual exemption will increase to £11,700, and the annual exemption generally available to trustees will increase to £5,850 from April 2018.

Inheritance Tax – the government has commissioned, and received, research to understand the motivations, behaviours and attitudes underlying decisions made by individuals on Inheritance Tax matters and the use of reliefs and exemptions in that process.

VAT – The threshold for registration is unchanged at £85,000. There had been suggestions made to the Chancellor that this should be reduced to £20,000, so most businesses will consider this to be good news.

National living wage

The rates increase to £7.83 per hour (those aged over 25), £7.38 (21-24 year olds), £5.90 (18-20 year olds), £4.20 (16-18 year olds) and £3.70 (apprentice rate) from April 2018.

Pensions

Despite significant speculation that there would be changes that might adversely affect pensions, there has been no change made to tax relief on pension contributions or the Annual Allowance. The increase in the Lifetime Allowance in April 2018 to £1,030,000 (in line with September❜s Consumer Prices Index (CPI) rate) has been confirmed.

The rates for full single tier state pension has been confirmed as £164.35 (£4.80 increase). The basic state pension will increase by 3% to £125.97.

Savings

The ISA annual subscription limit for 2018-19 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs and Child Trust Funds for 2018-19 will be increase in line with CPI to £4,260.

Stamp duty

The government announced that it will exempt first-time buyers from Stamp Duty Land Tax on properties up to £300,000; this exemption is also available for the first £300,000 on properties up to £500,000. This is effective from 22 November.

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