Personal – Income Tax
- Confirmed that the tax-free personal allowance will rise to £11,500 in April 2017
- Threshold at which people pay 40% income tax will rise from its current level of £43,000 to £45,000 in April 2017.
- The government has already announced that Class 2 NICs will be abolished from 6 April 2018, but will rise to £148.20 from April 2017 and will continue to be collected via Self-Assessment.
- Less than a week after the Budget was announced, the proposals for Class 4 NICs to be increased from 9% to 10% from April 2018 and from 10% to 11% from April 2019 were scrapped.
- The National Insurance threshold has been aligned from April 2017 at £157 per week for employees and employers.
- The annual allowance for pension savings for those who have started to ‘draw down’ their pension savings will be cut to £4,000 from £10,000 from April 2017.
- Tax-free dividend allowance reduced from £5,000 to £2,000 from April 2018.
Personal – Other
- National living wage up to £7.50 in April 2017.
- From 6 April 2017, the annual ISA allowance will increase from £15,240 to £20,000.
- Corporation tax rate to be 19% from 2017, and 17% from 2020 as previously announced.
- ‘Making Tax Digital’ to be deferred by one year for businesses below the VAT threshold. For further details, please see our update here.
Business Tax – Other
- The VAT registration threshold will increase to £85,000, along with the deregistration threshold increasing to £83,000 from April 2017.
- From 6 April 2017, public sector bodies engaging workers through personal service companies (PSCs) will take on the responsibility of reviewing whether the ‘IR35’ intermediaries rules should apply to a particular engagement, and for deducting income tax and NICs where appropriate.
- Where the worker is supplied through an agency, the public sector body must make the decision as to whether ‘IR35’ applies but it is the agency’s responsibility to operate the payroll. This is a major change from the current practice and although there were suggestions that the new arrangements could also be extended to the private sector, nothing was announced to this effect.