2016 Autumn Statement Highlights
23 November 2016 •
Today’s Autumn Statement introduced very few new measures to the tax code. Here is a review of the headline announcements - and a reminder of the measures coming in from April 2017 and April 2018 are also highlighted below.
Measures introduced from April 2017
Income tax
The annual personal allowance is to increase to £11,500 from April 2017.
Employment taxation
From April 2017 salary sacrifice schemes will no longer be available. Existing arrangements will be protected until April 2018 with some particular schemes being protected until April 2021.
These changes do not affect salary sacrifice schemes in place for Pensions, Childcare, Cycle to Work and ultra-low emission cars.
The National Insurance thresholds for Employers and Employees will be aligned from April 2017 so that Class 1 NICs become due on earnings in excess of £157pw.
Employee Shareholder Status (“ESS”) arrangements entered into after 1 December 2016 will not receive the favourable tax advantages previously available.
Property taxation
As previously announced a restriction on the tax-deductibility of mortgage interest payments for private landlords will be introduced from April 2017 and is to be phased in over four tax years up to 2020/21.
Savings
The ISA limit is to increase to £20,000 from April 2017. In addition, the new Lifetime ISA is to be introduced for adults under 40 at 6 April 2017. Individuals will be able to save up to £4,000 per annum and receive a 25% bonus from the Government up to the age of 50.
Corporation Tax
The corporation tax rate is set to fall to 19% from April 2017 onwards. In addition, new measures will come into effect from April 2017 onwards applicable to large corporations (i.e. those with profits in excess of £5M per year), restricting the deductibility of losses from earlier years and also the deductibility of interest costs that are allowable.
Value Added Tax
A new 16.5% rate will be introduced to the VAT flat rate scheme from 1 April 2017 for those businesses with limited costs.
Non-UK Domiciliaries
As previously announced, from April 2017 long term UK residents who are not domiciled in the UK will assume a deemed UK domicile for Inheritance Tax purposes if they are resident in the UK for 15 of the last 20 years.
Inheritance Tax will also be charged on non-UK domiciled individuals who hold UK residential property indirectly through an offshore structure, such as a company or Trust.
Proposed measures from April 2018
Employment
It is proposed that from April 2018, Employers National Insurance contributions will be payable on termination payments where the amount exceeds £30,000.
National Insurance
From 2018, Class 2 NIC for self-employed will be abolished. There will be a consultation regarding voluntary Class 3 contributions and Class 4 NIC, which are paid by the self-employed, to consider how to build entitlement to the State Pension and other contributory benefits which used to be covered by the payment of Class 2 contributions.
If you would like to explore what the Autumn Statement could mean for you and your business, please call 020 7731 6163 to talk to one of our tax team.