Autumn Statement - November 2016
The Autumn Statement and the Spring Budget are being abolished….but the Autumn Budget and Spring Statement are being introduced. As a result, we can look forward to two Budgets in 2017 but with the promise of future years only containing one where significant changes are announced….phew!
National living wage
For those aged 25 or over, the national living wage will increase from £7.20 to £7.50 per hour with effect from April 2017.
National minimum wage
The government has also announced the new national minimum wage rates that will apply from April 2017 will be as follows:
- 21 to 24 year old: £7.05 per hour
- 18 to 20 year olds: £5.60 per hour
- 16 to 17 year olds: £4.05 per hour
- apprentices: £3.50 per hour.
VAT flat rate scheme
The chancellor announced the introduction of a new 16.5% flat rate of VAT for ‘businesses with limited costs'.
From 1 April 2017, businesses will be required to determine whether they meet the definition of a limited cost trader at the same time as establishing their applicable VAT rate, based on their trade sector. This also applies to existing users of the VAT flat rate scheme.
A limited cost trader will be one whose VAT inclusive expenditure on goods is either:
- less than 2% of their VAT inclusive turnover in a prescribed accounting period
- greater than 2% of their VAT inclusive turnover but less than £1,000 per annum
The personal allowance for 2017/18 will increase by £500 to £11,500 and the higher rate threshold to £45,000.
The intention is for the personal allowance to increase to £12,500 and the higher rate threshold to £50,000 by the end of this parliament.
Property and trading income
As announced at Budget 2016, there are to be 2 new income tax allowances of £1,000 each for trading and property income. Individuals with trading income or property income below the level of the allowance will no longer need to declare or pay tax on that income.
Pensions and savings
The ISA limit will be increased to £20,000 from 6 April 2017.
The band of savings income that is taxed at the starting rate of 0% will remain at £5,000 in 2017/18.
A new 3-year investment bond will be introduced from spring 2017, with an indicative rate of 2.2%. The bond will offer the flexibility to save between £100 and £3,000 and will be available to those aged 16 or over.
Rural rate relief 100% - to remove the inconsistency between rural rate relief and small business rate relief, rural rate relief will double to 100% from 1 April 2017.
Letting agency fees - the costs of letting agency fees are being passed from the tenant to landlords, another cost for landlords to weigh up in their changing tax landscape.
National Insurance contributions - the starting threshold for employee and employer National Insurance bands will be aligned from April 2017, at no cost to employees but an additional cost of £7.18 per employee per year for the employer.
See our Tax Card for some of the most commonly used rates.