Personal Tax

The government has recommitted to raising the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of the Parliament. It will then rise in line with CPI as the higher rate threshold does, rather than in line with the NMW.  From April 2017 the personal allowance will rise to £11,500 and the higher rate threshold to £45,000.

Employment Taxes

National Living Wage will increase from £7.20 to £7.50 from April 2017 which equates to an annual pay rise of over £500 for full time workers. The government will also invest an additional £4.3m pa to strengthen NMW enforcement.

Salary sacrifice: the tax and employer National Insurance advantages of salary sacrifice schemes will be removed from April 2017, except for arrangements relating to pensions, childcare, Cycle to Work and ultralow emission cars. Arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021.

Valuation of benefits in kind – the government will look at how various benefits in kind are valued for tax purposes.

Employee business expenses – the government will also publish a call for evidence at Budget 2017 on the use of the income tax relief for employees’ business expenses.

Off-payroll working rules: following consultation, the off-payroll working rules in the public sector will be reformed from April 2017 by shifting responsibility for operating the rules and paying the correct tax, to the body paying the worker’s company.

National Insurance

Thresholds –the NI secondary (employer) threshold and the NI primary (employee) threshold will be aligned from April 2017, meaning that both employees and employers will start paying National Insurance on weekly earnings above £157.

As previously announced, Class 2 NICs will be abolished from April 2018.

Savings

NS&I Investment Bond – The Government will introduce a new NS&I 3 year savings bond in Spring 2017. The expected interest rate is 2.2% but this may be adjusted to reflect market conditions when the product is launched. The bond will be open to those aged 16 and over,  and will be open for investments of between £100 and £3,000 and will be available for 12 months from Spring 2017.

Pensions

Money Purchase Annual Allowance – The Money Purchase Annual Allowance will be reduced to £4,000 from April 2017.

The ‘Triple-lock’ on state pension will not be abandoned.

Making Tax Digital –no new announcements other than the government will publish its response to the Making Tax Digital consultations and provisions to implement the previously announced changes in January 2017.

Reforms to the taxation of non-domiciled individuals

As previously announced, the permanency of non-domiciled tax status and from April 2017 will cease, non-domiciled individuals will be deemed UK-domiciled for tax purposes if they have been UK resident for 15 of the past 20 years, or if they were born in the UK with a UK domicile of origin.

From April 2017, IHT will be charged on UK residential property when it is held indirectly by a non-domiciled individual through an offshore structure, such as a company or a trust.

The government will change the rules for the Business Investment Relief (BIR) scheme from April 2017 to make it easier for non-domiciled individuals who are taxed on the remittance basis to bring offshore money into the UK for the purpose of investing in UK businesses.