Budget 2017 – Personal tax

Income Tax

The government is committed to raising the personal allowance (PA) to £12,500 and the higher rate threshold (HRT) to £50,000 by 2020. In a bid to edge towards these rates the PA and HRT will increase to £11,850 and £46,350 respectively in April 2018. This will mean that in 2018-19 a typical taxpayer will pay at least £1,075 less tax than in 2010-11.

The Marriage Allowance allows taxpayers to transfer up to 10% of their unused PA to their partner, reducing their tax bill by up to £230 a year in 2017-18. The government will now allow claims in cases where a partner has died before the claim was made. These claims will be able to be backdated by up to 4 years.

The ISA annual subscription limit for 2018-19 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs and Child Trust Funds for 2018-19 will be uprated in line with CPI to £4,260.

State Pension and Pension Credit – The basic State Pension will be increased by the triple lock. The rise in April 2018 will be 3%, a cash increase of £3.65 per week for the full basic State Pension.

National Living Wage/ National Minimum Wage

With effect from April 2018 the rates will increase as follows:

National living wage will increase to from £7.50 to £7.83

National Minimum Wage:

21 to 24 year olds will increase from £7.05 to £7.38

18 to 20 year olds will increase from £5.60 to £5.90

16 to 17 year olds will increase from £4.05 to £4.20

The rate for apprentices by will increase from £3.50 to £3.70

Capital Gains Tax

The introduction of the 30-day payment window between a capital gain arising on a residential property and payment will be deferred until April 2020.

To align the UK with other countries and remove an advantage which non-residents have over UK residents, all gains on non-resident disposals of UK property will be brought within the scope of UK tax. This will apply to gains accrued on or after April 2019. The government intends to include targeted exemptions for institutional investors such as pension funds.

Pensions

Lifetime allowance for pensions – the lifetime allowance for pension savings will increase in line with CPI, rising to £1,030,000 for 2018-19.

Employment Taxes

Benefits in Kind

• Company cars – the fuel benefit charge and the van benefit charge will both increase by RPI from 6 April 2018.

 

• Electric vehicles – from April 2018, there will be no benefit in kind charge on electricity that employers provide to charge employees’ electric vehicles.

 

• There will be a rise in the existing Company Car Tax diesel supplement from 3% to 4%, with effect from 6 April 2018. This will apply only to diesel cars which do not meet the Real Driving Emissions Step 2 (RDE2) standards

Expenses

• To help reduce the burden on employers, from April 2019 they will no longer be required to check receipts when reimbursing employees for subsistence using benchmark scale rates. In addition, the existing concessionary accommodation and subsistence overseas scale rates will be placed on a statutory basis to provide greater certainty for businesses.

 

Road Tax

There will be a Vehicle Excise Duty (VED) supplement that will apply to new diesel cars first registered from 1 April 2018, so that their First-Year Rate will be calculated as if they were in the VED band above. This will not apply to next-generation clean diesels.

Making Tax Digital (MTD)

As announced in July and legislated for in the Finance (No. 2) Act 2017, no business will be mandated to use MTD until April 2019. Only those with turnover above the VAT threshold will be mandated at that point, and then only for VAT obligations. The scope of MTD will not be widened before the system has been shown to work well, and not before April 2020.

Stamp duty land tax

In a bid to help young people buy their first home stamp duty will be abolished for first time buyers on purchases up to £300,000.  Furthermore for first time buyers purchasing property of up to £500,000 will not pay stamp duty on the first £300,000.

The government will amend SDLT higher rates for additional properties with immediate effect. The changes will benefit those increasing their share of their own home, families affected by a divorce court order, and cases where properties are held in trust for children subject to Court of Protection orders. The government will also remove a potential opportunity for avoidance.