- Committing to raise the Personal Allowance to £12,500 and the Higher Rate Threshold to £50,000 by 2020-21
The Personal Allowance is the amount of income you can earn before you start paying income tax. It is currently £11,000 this year, and will rise to £11,500 in 2017-18. The point at which you pay the higher rate of income tax will increase from £43,000 this year, to £45,000 in 2017-18.
Once the Personal Allowance reaches £12,500, it will increase in line with inflation.
- The National Living Wage and the National Minimum Wage will increase from April 2017
The National Living Wage for those aged 25 and over will increase from £7.20 per hour to £7.50 per hour. That means over £1,400 a year more for a full-time worker previously on the National Minimum Wage.
The National Minimum Wage will also increase:
- for 21 to 24 year olds – from £6.95 per hour to £7.05
- for 18 to 20 year olds – from £5.55 per hour to £5.60
- for 16 to 17 year olds – from £4.00 per hour to £4.05
- for apprentices – from £3.40 per hour to £3.50
And £4.3 million will be spent on:
- helping small businesses to understand the rules
- cracking down on employers who are breaking the law by not paying the minimum wage
- A ban on letting agents charging fees to renters
Letting agents will no longer be able to charge renters fees, for example when they sign a new tenancy agreement. This will stop tenants being hit with fees averaging £223 per tenancy.
The government will consult on this in due course.
- £1 billion to invest in full-fibre broadband and trialling 5G networks
Investment will support the private sector to roll out more full-fibre broadband by 2020-21. Funding will also support trials of 5G mobile communications.
And from April 2017, the government will also provide a new 100% business rates relief for new full-fibre infrastructure for a 5 year period.
- £2 billion more per year in research and development funding by 2020-21
A major increase in research and development funding for universities and businesses with R&D projects to help the UK remain an attractive place for businesses to invest in innovative research.
This will back scientific research and development of technologies such as robotics, artificial intelligence and industrial biotechnology.
- Committing to cutting corporation tax to 17% by 2020
The main rate of corporation tax has already been cut from 28% in 2010 to 20%, and will be cut again to 17% by 2020, by far the lowest in the G20 and benefitting over 1 million businesses.
- Rural Rate Relief will increase to 100%
Rural rate relief will increase from 50 to 100% in April 2017, saving a business up to £2900 a year. This business rate relief is available to businesses in rural areas with a population under 3,000, where that business is:
- the only village shop or post office with a rateable value of up to £8,500, or
- the only public house or petrol station with a rateable value of up to £12,500
- Cracking down on tax avoiders and those who help them
A new penalty is being introduced for those helping someone else to use a tax avoidance scheme. Tax avoiders are hit with significant bills when HMRC defeats their avoidance scheme, this new penalty will ensure that those who help them will also face the consequences.
Also, tax avoiders will not be able to claim as a defence against penalties that relying on non-independent tax advice is taking reasonable care.
- Salary sacrifice schemes will be taxed more fairly
From April 2017, most salary sacrifice schemes will be subject to the same tax as cash income.
In salary sacrifice schemes, employees exchange some of their salary for a non-cash benefit in kind (such as a mobile phone). Both the employer and employee make a tax saving, because the benefit is taxed less than a salary or not taxed at all.
This will affect types of salary sacrifice schemes differently:
- pensions, pensions advice, childcare, Cycle to Work and ultra-low emission cars will be exempt
- all arrangements in place before April 2017 will be protected for up to a year, and arrangements in place before April 2017 for cars, accommodation and school fees will be protected for up to 4 years
- Insurance Premium Tax will increase by 2% from 1 June 2017
Insurance Premium Tax (IPT) will increase from 10% to 12%. IPT is a tax on insurers and it is up to them whether and how to pass on costs to customers.
If you require further guidance on how to set up a new business or register for taxes or you would like a professional to take all the stress away and do all the tax work for you, Adam Hotson at APH Accountancy Services would be pleased to help.
Call: 01702 343619