Building a Great Britain fit for the future

The headline for the Autumn 2017 budget was building a Great Britain fit for the future, creating jobs, preparing for a digital age and supporting families. With the surprise of the day being the abolition of stamp duty (up to £300,000) for first time buyers. 

Families

On first glance for the day-to-day headline rates of tax there was minimal change. 

Personal allowances for 2018-19 are increased from £11,500 to £11,850 and the higher rate threshold to £46,350  as part of the ongoing progression to the meet the manifesto pledges of £12,500 and £50,000 respectively.

From 6 April 2018 the transfer of £1,185 of a personal allowance to a spouse or partner or deceased partners is available. The inclusion of deceased partners applies from 29 November 2017 and can be backdated 4 years, subject to conditions.

Increases in the national living wage and further adjustments to the Universal Credit process are also designed to help the lower income family. Lowest income families claiming Universal Credit will not receive the full impact of the increase in personal allowance as the benefit is calculated with reference to net income after tax. 

Duties on petrol, wine, beer and spirits have been frozen although high strength alcohol is to be given its own category of duties.

Tax Collection

Avoidance and Evasion is a continuing target of new legislation and attention. Measures to continue with tackling this problem are continuing to be introduced including further measures in respect of disguised remuneration, schemes targeted at obtaining double taxation relief, and cross border transactions.

With digital online trading being an international problem global consultation will be undertaken and online market places will be held jointly liable for online VAT fraud by their online traders.

Royalties relating to UK sales being paid to low-tax jurisdictions will be subject to UK income tax from April 2019.

Business
The Chancellor announced a consultation on the VAT threshold for small businesses. Given how important this will be with the roll out of Making Tax Digital this will definitely be a “watch this space”. For the time being the threshold has been frozen for two years at the current level of £85,000, after much speculation in the press.

To encourage investment in business the EIS investment limits have been doubled for investment based companies. The main Research and Development Credit is also increased to 12% to stimulate investment in innovation. However, to increase fairness between corporate taxation and personal taxation indexation allowance for chargeable gains are being frozen from 1 January 2018. 

In order to ensure that businesses have a skilled workforce in the future to achieve this innovation extra money is being given to schools for improving Maths and Computer science.

As previously reported the dividend allowance will be reducing from £5,000 to £2,000 from April 2018. For the majority of small companies with director / shareholders it will still be more beneficial to take the minimum salary and dividends as opposed to a higher salary.

Corporation tax
The corporation tax rate will remain at 19% for the 2017/18 and 2018/19 tax years.  

Making tax digital 
The chancellor announced that the enabling legislation in the Finance (No.2) Act 2017 has been passed. This allows, subject to secondary legislation for HMRC to require businesses to keep records digitally. VAT is the only area mandated to use MTDfB and this is from April 2019.

IR35 
Unsurprisingly, it was announced that HMRC will consult on reforms to IR35 for the private sector. It is unclear if this will look at a more modern approach to self-employment or will keep the assessment used for the public sector which was enacted this year.  

Class 2 and Class 4 NIC
The government has chosen to delay the abolition of Class 2 NICs by a year until 6 April 2019. Class 4 will remain at 9% and will not be subject to the increases previously announced.

IHT
The Nil-rate band remains at £325,000. The residence nil-rate band for deaths in the following tax years will be:

•    £100,000 in 2017 to 2018
•    £125,000 in 2018 to 2019
•    £150,000 in 2019 to 2020
•    £175,000 in 2020 to 2021

Taxation of trusts
The taxation of trusts will be subject to a consultation and review in 2018.

Spending plans

Capital investment in the NHS, technology, construction , skills gap, infrastructure, trains and transforming cities, particularly in the North were the focus of the building of Great Britain, whilst keeping a balance with reducing the deficit and keeping taxes low. 

Electric cars and driverless cars were the subject of much hilarity with Jeremy Clarkson being singled out for a joke with Hammond and May.