The Chancellor presented his Autumn Budget on 22 November 2017 whose main theme is to get Britain building again by abolishing stamp duty for first time buyers and pledging to build 300,00 new homes per year over the life of this parliament. The budget is also tech focused by prioritising Artificial Intelligence in particular driver-less cars as an area of potential growth over the coming years. Overall there seems to be signs of easing off on austerity and leaning towards investment or good spending if you like.
As expected HMRC will carry put consultations on extending the IR35 rules to the private sector, so watch this space.
See below for a quick guide to the budget:
A SIMPLE GUIDE TO THE BUDGET 2017
This is a basic guide, prepared by ACCA’s Technical Advisory team, for members and their colleagues or clients. It is an introduction only and should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.
The budget message from the Chancellor was that ‘the economy that continues to grow, continues to create more jobs than ever before and continues to confound those who seek to talk it down’. You can read the individual measures and details of some of the numerous consultations below.
Rates and allowances
| 2017/18 | 2018/19 | |
| £ | £ | |
| Income tax rates – (non-dividend income) | ||
| 0% lower rate tax – savings rate only | Up to 5,000 | Up to 5,000 |
| 20% basic rate tax | 11,500 to 45,000 | 11,851 to 46,350 |
| 40% higher rate tax | 45,001 – 150,000 | 46,351 – 150,000 |
| 45% additional rate tax | Above £150,000 | Above £150,000 |
| Scottish Income tax rates – (non-dividend income) | ||
| 0% lower rate tax – savings rate only | Up to 5,000 | Up to 5,000 |
| 20% basic rate tax | 11,500 to 43,000 | 11,500 to 43,000 |
| 40% higher rate tax | 43,001 – 150,000 | 43,001 – 150,000 |
| 45% additional rate tax | Above £150,000 | Above £150,000 |
| Personal allowance | ||
| Personal allowance | 11,500 | 11,850 |
The Scottish government budget will take place on 14 December 2017.
Marriage allowance
From 6 April 2018 the transfer of £1,185 of a personal allowance to a spouse or partner or deceased partners is available. The inclusion of deceased partners applies from 29 November 2017 and can be backdated 4 years, subject to conditions.
Dividend allowance
The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018. The reduction of the dividend tax free allowance impact is £225, £975 or £1,143 a year depending on whether recipients pay tax at the basic rate, higher rate or the additional rate.
Stamp Duty Land Tax: relief for first time buyers
From 22 November 2017 first time buyers paying £300,000 or less for a residential property will pay no Stamp Duty Land Tax (SDLT). This measure does not apply in Scotland. SDLT was devolved to Scotland on 1st April 2015. This measure will apply in Wales until 1 April 2018, when SDLT will be devolved to Wales.
| Portion of consideration | Current rates | New rate for first time buyers |
| Up to £125,000 | 0% | 0% |
| Over £125,000 and up to £250,000 | 2% | 0% |
| Over £250,000 and up to £300,000 | 5% | 0% |
| Over £300,000 and up to £500,000 | 5% | 5% |
Corporation tax
The corporation tax rate will remain at 19% for the 2017/18 and 2018/19 tax years.
Annual investment allowance
The annual investment allowance of £200,000 per annum remains available for companies and for unincorporated businesses.
Making tax digital
The chancellor announced that the enabling legislation in the Finance (No.2) Act 2017 has been passed. This allows, subject to secondary legislation for HMRC to require businesses to keep records digitally. VAT is the only area mandated to use MTDfB and this is from April 2019.
VAT
| 2017/18 | 2018/19 | |
| £ | £ | |
| VAT | ||
| Standard rate | 20% | 20% |
| Registration threshold | 85,000 | 85,000 |
| Deregistration threshold | 83,000 | 83,000 |
A review of VAT thresholds has been announced, with the Chancellor stating that the thresholds will remain unchanged for two years.
Relief from business rates increases
The Chancellor has announced that business rates will rise in line with CPI. This is lower than the inflation rate.
ATED
From 1 April 2018 the charges for the annual tax on enveloped dwellings (ATED) will be increased by 3%. Returns for 2018/19 are to be filed electronically.
| 2016/17 | 2017/18 | |
| £ | £ | |
| Annual Tax on Enveloped Dwellings (ATED) | ||
| More than £0.5m but not more than £1m | 3,500 | 3,600 |
| More than £1m but not more than £2m | 7,050 | 7,250 |
| More than £2m but not more than £5m | 23,550 | 24,250 |
| More than £5m but not more than £10m | 54,950 | 56,550 |
| More than £10m but not more than £20m | 110,100 | 113,400 |
| More than £20m | 220,350 | 226,950 |
IR35
Unsurprisingly, it was announced that HMRC will consult on reforms to IR35 for the private sector. It is unclear if this will look at a more modern approach to self-employment or will keep the assessment used for the public sector which was enacted this year.
Increase in Individual Savings Accounts (ISA) limits
The annual ISA allowance remains unchanged at £20,000.
IHT
The Nil-rate band remains at £325,000. The residence nil-rate band for deaths in the following tax years will be:
- £100,000 in 2017 to 2018
- £125,000 in 2018 to 2019
- £150,000 in 2019 to 2020
- £175,000 in 2020 to 2021
Interest relief for landlords
Landlords will be able to obtain relief as follows:
Finance cost allowed in full Finance cost allowed at basic rate
Year to 5 April 2016 100% 0%
Year to 5 April 2017 100% 0%
Year to 5 April 2018 75% 25%
Year to 5 April 2019 50% 50%
Year to 5 April 2020 25% 75%
Year to 5 April 2021 0% 100%
Apprenticeships
The annual pay bill and levy rate remains unchanged. A non-levy paying employer will need to co-invest 10% and will benefit from government funding to cover the remaining 90% of the cost. http://www.accaglobal.com/uk/en/employer/recruit-acca-accounting-technician-apprentices.html
Cash accounting
The trading cash basis thresholds for unincorporated businesses will remain at £150,000. The exit threshold is also unchanged at £300,000.
Disincorporation relief
The current relief will not be extended beyond 31 March 2018.
Taxation of trusts
The taxation of trusts will be subject to a consultation and review in 2018.
Corporation Tax: removal of capital gains indexation allowance
When a company makes a capital gain on or after 1 January 2018, the indexation allowance that is applied in order to determine the amount of the chargeable gain will be calculated up to December 2017.
R&D
The Research and Development Expenditure Credit rate will increase by 1% to 12% for expenditure incurred on or after 1 January 2018.
Class 2 and Class 4 NIC
The government has chosen to delay the abolition of Class 2 NICs by a year until 6 April 2019.
Class 4 will remain at 9% and will not be subject to the increases previously announced.
Landlords
Landlords, now have a choice on deductions in relation to travel expenses as they are now able to use mileage allowances for their property rental businesses
Diesel cars
The benefit in kind will increase from 3% to 4% with the maximum percentage being 37%.
ACCA LEGAL NOTICE
This is a basic guide prepared by the ACCA UK’s Technical Advisory Service for members and their clients. It should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.