EIS and VCTs will also see increased limits for investments in knowledge-intensive companies:
The Government will legislate to:
The changes will have effect on and after 6 April 2018. This measure is subject to normal state aid rules.
Source: Ashing Chartered Accountant, GOV.uk, HMRC
Incentives to encourage VCTs towards higher risk investments will include:
Source: Ashing Chartered Accountant, Gov.UK, HMRC
Government to scrapping Stamp Duty Land Tax (SDLT) for first-time homebuyers,
The personal allowance – the amount you earn before you start paying income tax – will rise from £11,500 to £11,850.
The National Living Wage for those aged 25 and over will increase from £7.50 per hour to £7.83 per hour from April 2018. Over 2 million people are expected to benefit. For a full-time worker, it represents a pay rise of over £600 a year.
The cost of a pint of beer or cider will be 1p lower than if duty had risen by inflation. The cost of a typical bottle of wine will be 6p cheaper.
Cheap, high-strength cider will be subject to a new band of duty.
The duty on cigarettes will increase by 2% above inflation. Hand-rolling tobacco duty will increase by 3% above inflation.
Air Passenger Duty will be frozen for all economy passengers and all short-haul flights. It will rise for premium fares on long-haul flights, and on private jets.
Households in need who qualify for Universal Credit will be able to access a month’s worth of support within five days, via an interest-free advance, from January 2018. This can be repaid over 12 months.
Claimants will be eligible for Universal Credit from the day they apply, rather than after seven days. Housing Benefit will continue to be paid for two weeks after a Universal Credit claim.
Low-income households in areas where private rents have been rising fastest will receive an extra £280 on average in Housing Benefit or Universal Credit.
Consultation on threshold of £85,000 at which small businesses pay VAT.
Source: gov.uk, theguardian.com
Implementing some key tax-saving strategies ahead of the end of the tax year could help to ensure that your business and personal finances remain tax-efficient. Below we outline some tax planning tips and strategies to consider before 5 April.
ISAs can offer a useful tax-free way to save, whether this is for your children’s future, a first home or another purpose. Individuals may invest in a combination of cash or stocks and shares, up to a limit of £20,000 for the 2017/18 tax year.
The new Innovative Finance ISA is designed to encourage peer-to-peer lending. Interest and gains, along with loan repayments, will be eligible to be held in an Innovative Finance ISA and will not be subject to tax.
Meanwhile, those looking to save for the purpose of purchasing a first home may wish to make use of a Help to Buy ISA, £1,000 initial and £200 per month. Lifetime ISA which is capped at a maximum of £4,000.
By making the most of capital allowances, businesses may be able to write off the costs of capital assets against taxable profits.
From 1 January 2016, the Annual Investment Allowance (AIA) has been set at a permanent rate of £200,000. This means that up to £200,000 of the year’s investment in plant and machinery (excluding cars) is allowed at 100%. Businesses of any size and most business structures can make use of the AIA. However, there are provisions to prevent multiple claims.
You may also wish to consider ‘greener’ investments. 100% allowances are available for some investments, including on energy-saving equipment and low CO2 emissions cars with emissions of up to 75 g/km.
Effective retirement planning can play a crucial role in your tax-efficient planning strategy, but in our experience many individuals do not take full advantage of tax reliefs and (tax-deductible) employer contributions during their working lives. This is despite the fact that personal contributions to pension schemes may attract tax relief of up to 50%.
Pension contributions must be paid on or before 5 April 2018 for them to be applied against 2017/18 income. Annual contributions limited to the greater of £3,600 (gross) or the amount of your UK relevant earnings may be eligible for tax relief. However, these will be subject to the annual allowance, which is generally £40,000.
An annual allowance taper was introduced in April 2018, applying to those with net income over £110,000 and adjusted annual income (their income, plus both their own and their employer’s pension contributions) over £150,000. For every £2 of adjusted income over this figure, a person’s annual allowance is reduced by £1 (down to a minimum of £10,000).
Individuals are entitled to a tax-free personal allowance (PA), which is set at £11,500 for 2017/18 For couples where one person has little or no income, you may wish to consider transferring income (or income-producing assets) to them, to make full use of their PA. However, care should be taken to avoid falling foul of the settlements legislation, and you should consider the legal consequences of transfers.
Some married couples and civil partners may also be eligible for the Marriage Allowance, which allows individuals to transfer 10% of their PA to their spouse or civil partner where neither pays tax at the higher or additional rate.
The Pensions Regulator is bringing the staging process for auto-enrolment to an end. From 1 October 2017 all new employers will have to begin the auto-enrolment process from the date they start their payroll. This means that qualifying staff must be enrolled in a workplace pension and contribute towards it.
The qualifying criteria for staff are as follows:
– Anyone aged between 22 and State Pension Age
– And earning over £10,000 per year, or £833 per month, or £193 per week
These staff must be put into a pension scheme and both you and they are required to pay into it. However, a three month deferral period for the company and new starters can be used, and this can help you manage the scheme better.
The Pensions Regulator’s guide for new employers can be found here: http://www.thepensionsregulator.gov.uk/en/employers/employing-staff-for-the-first-time.aspx
If you are considering employing someone for the first time we can give you detailed advice to help you manage it simply and cost effectively.
Remember that capital gains in the 2017-18 tax year under £11,300 are tax-free. Married couples and civil partners who own assets jointly can claim a double allowance of £22,600.
From 6 April 2016, CGT is charged at 10% if you are a basic-rate taxpayer (except on property gains, where the rate is 18%) and 20% if you pay tax at a higher rate (except on property gains, where the rate is 28%).
Remember, if you don’t use the allowance within the tax year, it’s lost forever.
What is CGT?
Capital gains tax (CGT) is a tax on the increase in value of your possessions – such as a second home, antiques or shares – during the time you have owned them.
Any tax is due when you dispose of them, usually by selling them or giving them away.
You need to have made a certain amount of profit on your items to be taxed on them. This amount depends on whether you’re a basic-rate or higher-rate taxpayer, and what the current tax-free allowance is for the tax year. Find out more about tax rates.
Typical investments that you might have to pay capital gains on include:
You don’t have to pay CGT if you sell a car, or if you make a profit on selling your own home.
Income tax table for 2016 income
|Taxable income bracket||Tax rate on income in bracket|
|From EUR||To EUR||Percent|
Please note that an exceptional contribution of 3 % or 4% on high income earners (i.e., where the income of reference exceeds € 250,000 for a single taxpayer and €500,000 for a married taxpayer) have been set up and is applicable as of 2011 income. The contribution will be repealed as soon as the deficit target of 3 percent is reached.
For 2016 compensation, the income tax withholding rates for non-residents are 0, 12 and 20 percent, depending on the amount of net compensation, as outlined below. The tax may, in some cases, be final. When compensation reaches the 20 percent bracket, an annual individual non-resident income tax return is also required even though tax has been withheld at the source. When an annual non-resident return is required for either French-source compensation income or other French-source income, this income is subject to the same progressive tax rates outlined above or a flat rate of 20 percent, whichever of the two is higher.
Non-resident withholding rates for 2016 income
|Monthly taxable income bracket||Tax rate on income in bracket|
|From EUR||To EUR||Percent|
The maximum marginal tax rate on the graduated rate scale applicable to 20152016 income is 45 percent, reached at EUR EUR 152,108260 of taxable income for a single taxpayer; this amount is doubled for married taxpayers and increases according to family size.
Source: KPMG, http://europa.eu
Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs – meaning the end of the annual tax return for millions.
|July to December 2017||
|January to June 2018||
|July to December 2018||
The proposed HMRC timeline states that the system is due to be complete by 2020.
Source: HMRC, Tax going digital
|Current Bank Rate||0.25%|
|View past decisions||Next due:
3 Aug 2017
|Quantitative Easing Asset Purchase Programme||£435 bn|
3 Aug 2017
|Corporate Bond Purchases||£10 bn|
|Target 2.0%||Next due:
15 Aug 2017