Autumn Statement 2016 - how will it affect you and your business?

Personal Taxes:

As previously announced in the budget, the personal allowance will increase from the current amount of £11,000 (16/17) to £11,500 (17/18).

The Basic Rate Limit will increase from £32,000 for (16/17) to £33,500 in 17/18.

Therefore, the higher rate threshold will be as follows:

                                                             16/17                                    17/18

Personal Allowance                         £11,000                                 £11,500

Basic Rate                                       £32,000                                £33,500

Higher Rate threshold                    £43,000                               £45,000

There were no changes announced to the Dividend Tax which came into effect from 6th April 2016 and if you require any tax planning or information on how much it will cost you personally to take dividends out of a limited company, then please contact us.

Hobby Traders: Another point that was also mentioned in the budget earlier in the year, which has now been confirmed, is that there will be two new income tax allowances for “hobby traders”.

These will cover trading income and property income of up to £1,000. Individuals with income below this new allowance will not need to declare this on a tax return and pay no taxation on the income.

Salary Sacrifice Scheme: Mr Hammond announced that Salary Sacrifice Schemes (SSS) will be taxed “more fairly” from April 2017.

A SSS is when an employees exchanges some of their salary for a non cash benefit with both the employee and employer making a tax a saving.

There will, however, still be some items that will be exempt from the new rules and they are:

-          Pensions and advice, Childcare, Cycle to Work schemes and ultra-low car emissions schemes.

Also, there is an arrangement for schemes in existence prior to April 2017 will be protected for up to a year and arrangements in place for cars, accommodation and school fees will be protected for up to 4 years.

Temination payments over £30,000 which are subject to income tax after April 2018 will also be subject to employer National Insurance Contributions

Businesses Taxes:

Corporation Tax: The government again confirmed that they still intend to reduce the Corporation Tax rate to 17% by 2020. The current rate is 20% and this will reduce to 19% by 31 March 2018 with further 1% decreases each year to 2020.

VAT: The VAT threshold will stay at £83,000 but there were changes announced to the Flat Rate Scheme. From 1 April 2017 there will be a new rate of 16.5% for businesses with limited costs, such as providing services. So there could be a potential increase from the consultancy rate of 14.5% for some companies.

Details of this have now been published by HMRC on https://www.gov.uk/government/publications/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note

If you think that this could affect your business, feel free to contact us.

R&D: There will be a review of the Research and Development (R&D) tax scheme reliefs available for companies. No specific details of this have been announced as of yet but more money has been promised for this area.

Business Rates: from April 2017, small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates. There will be a tapered rate of relief on properties worth up to potentially £18,000, but this has not been confirmed.

Non Resident Companies: The government is considering bringing all non-resident companies receiving taxable income from the UK into the Corporation Tax regime. Details of this will be announced in the 2017 budget after a consultation has been launched.

The Insurance Premium Tax (IPT) will rise to 12% from the current rate of 10% from 1 June 2017.

Company Car Taxation: In an effort to encourage the purchase of ultra-low emission vehicles, new company car tax bands for the lowest emitting cars will be introduced for the 2020/21 tax year. The percentage for cars with emissions greater than 90g.km will also increase by 1% in 2020/21.

The National Living Wage, for those aged 25 or over, will increase from £7.20 to £7.50 per hour with effect from April 2017. The government also announced the following rates for all other age categories:

16 – 17 year olds              £4.05 per hour

18 – 20 year olds              £5.60 per hour

21 – 24 year olds              £7.05 per hour

Apprentice rate                £3.50 per hour

Please view our youtube videos for the main points for business or individuals:

Businesses : https://www.youtube.com/watch?v=ojLwLSKHX9s

Individuals: https://www.youtube.com/watch?v=02zn7OXNWs8

Details on the main changes of the Autumn Statement can be found at:

https://www.gov.uk/government/news/autumn-statement-2016-some-of-the-things-weve-announced