Budget 2017 – changes we already knew about

Income tax and national insurance

Pre-Budget, we were expecting the personal tax allowance for April 2017/18 to increase to £11,500. The threshold above which you pay tax at 40% is set to rise from £43,000 to £45,000.

The government’s aim is that the personal tax allowance increases to £12,500 per annum during the course of this parliament.

National Insurance Contributions (NI)

The rate is set to remain at 12% for employees but the weekly threshold is due to increase to £157 (£8,164 pa).

ISA limits to increase

Currently, up to £15,240 can be invested in an ISA tax free each year. This will increase to £20,000 from April.

National Minimum Wage

Employers need to ensure they are paying the new or risk penalties. The rates are age-dependent, starting at £3.50 for the apprentice rate. The National Living Wage is £7.50 from April 2017.

Probate fees

Probate fees (or ‘death taxes’ are they are being called) are due to increase from May 2017 and charges will apply on a sliding scale, based on the value of the estate.

Business Rates

Businesses are still looking for some reassurance negating the significant impact of proposed changes due. The new rates come into effect on 1 April 2017.

Corporation Tax

The rate of corporation tax is due to fall to 19% from 1 April 2017.

Buy to Let Landlords

In his Summer Budget 2015, George Osborne announced that tax relief on mortgage interest would be reduced for buy to let landlords who pay tax at the higher rate. The relief will be gradually reduced to 20% phased in from April 2017 to April 2020.

Inheritance Tax

An additional IHT relief on main residence will be phased in from April 2017. This starts at £100,000 per person, increasing to £175,000 in 2020/21. Per couple, this presents a maximum IHT-free estate of £1m when the nil rate band of £325,000 per person is taken into account.

Making Tax Digital

This has been in the news quite a bit recently. Reporting under Making Tax Digital is now due to begin in April 2019.

 

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