2017

Highlights of the Budget 2017

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The Chancellor of the Exchequer; Philip Hammond has delivered his second Budget. He stated that “we are on the brink of a technological revolution” and he believes we should embrace it and feels that his Budget allows us to do so. Here are some key points from his speech that might have an impact on you and your clients. 
Making Tax Digital
There were no announcements or changes to the Making Tax Digital scope and pace. Only business with a turnover above the VAT threshold will be mandated to use MTD from April 2019 and then only to meet their VAT obligations. An updated statement of impacts will be published by the government on 1 December 2017. The scope of MTD will not be widened before the system has been shown to work well and not before April 2020 at the earliest. 
Individuals
From April 2018 the tax free personal allowance will rise to £11,850 and the higher rate threshold will be increased to £46,350.
The 0% starting rate for savings income will be retained at its current value of £5,000 during 2018 to 2019. 
Fuel duty rates will remain frozen for the tax year 2018 – 2019, despite the rumours that we might see a hike in the increase of diesel prices at the pump. 
However, the government does want to encourage the use of more environment friendly fuel for cars and so have made changes to include:
Company car benefits will see an increase to the diesel supplement from 3% to 4%. This will apply to all diesel cars registered on and after 1 January 1998 that do not meet the Real Driving Emissions Step 2 standards. 
From April 2018 employer-provided electricity for electric cars will not be taxed as a benefit in kind. 
The Vehicle Exercise Duty rates for cars, vans and motorcycles registered before 1 April 2017 and First Year Rates for cars under the post-April 2017 VED system will increase.  The First Year Rate of VED for new diesel cars registered on and after 1 April 2018 will go up by one band. 
Relief from Stamp Duty Land Tax comes into force today for first time buyers buying property for £500k or less. The first £300k will be free of stamp duty and 5% will be due on the remainder up to £500k. There is no relief where the consideration is more than £500k. 
The government will defer the introduction of the 30-day payment window for gains on residential property disposals until April 2020, presumably this is to coincide with Making Tax Digital for Individuals. 
Businesses
Despite the rumours of a reduction to the VAT threshold, it has been confirmed that it will remain at £85,000 for the next 2 years.  Philip Hammond also announced that online VAT fraud will be tackled by making all online marketplaces jointly liable with their sellers. 
A further £2.3 billion is being allocated for investment in research and development. From 1 January 2018 the rate of R&D tax credit will rise from 11% to 12% in order to support business investment in R&D. 
There will be a freeze to indexation allowance on corporate capital gains for disposals on and after 1 January 2018, which has been the case for individuals for some time, so this brings the corporate system into line with personal capital gains tax. 
Removal of the time limit of six years within which companies must adjust for any depreciatory transactions when claiming a capital loss on disposal of shares in a group company. This change will have effect for disposals of shares in or securities of a company made on and after 22 November 2017. 
This was a budget of few surprises with very little announcements to changes in tax. 

The Chancellor of the Exchequer; Philip Hammond has delivered his second Budget. He stated that “we are on the brink of a technological revolution” and he believes we should embrace it and feels that his Budget allows us to do so. Here are some key points from his speech that might have an impact on you and your clients. 

Making Tax Digital

There were no announcements or changes to the Making Tax Digital scope and pace. Only business with a turnover above the VAT threshold will be mandated to use MTD from April 2019 and then only to meet their VAT obligations. An updated statement of impacts will be published by the government on 1 December 2017. The scope of MTD will not be widened before the system has been shown to work well and not before April 2020 at the earliest. 

Individuals

From April 2018 the tax free personal allowance will rise to £11,850 and the higher rate threshold will be increased to £46,350.

The 0% starting rate for savings income will be retained at its current value of £5,000 during 2018 to 2019. 

Fuel duty rates will remain frozen for the tax year 2018 – 2019, despite the rumours that we might see a hike in the increase of diesel prices at the pump. 

However, the government does want to encourage the use of more environment friendly fuel for cars and so have made changes to include:

Company car benefits will see an increase to the diesel supplement from 3% to 4%. This will apply to all diesel cars registered on and after 1 January 1998 that do not meet the Real Driving Emissions Step 2 standards. 

From April 2018 employer-provided electricity for electric cars will not be taxed as a benefit in kind. 

The Vehicle Exercise Duty rates for cars, vans and motorcycles registered before 1 April 2017 and First Year Rates for cars under the post-April 2017 VED system will increase.  The First Year Rate of VED for new diesel cars registered on and after 1 April 2018 will go up by one band. 

Relief from Stamp Duty Land Tax comes into force today for first time buyers buying property for £500k or less. The first £300k will be free of stamp duty and 5% will be due on the remainder up to £500k. There is no relief where the consideration is more than £500k. 

The government will defer the introduction of the 30-day payment window for gains on residential property disposals until April 2020, presumably this is to coincide with Making Tax Digital for Individuals. 

Businesses

Despite the rumours of a reduction to the VAT threshold, it has been confirmed that it will remain at £85,000 for the next 2 years.  Philip Hammond also announced that online VAT fraud will be tackled by making all online marketplaces jointly liable with their sellers. 

A further £2.3 billion is being allocated for investment in research and development. From 1 January 2018 the rate of R&D tax credit will rise from 11% to 12% in order to support business investment in R&D. 

There will be a freeze to indexation allowance on corporate capital gains for disposals on and after 1 January 2018, which has been the case for individuals for some time, so this brings the corporate system into line with personal capital gains tax. 

Removal of the time limit of six years within which companies must adjust for any depreciatory transactions when claiming a capital loss on disposal of shares in a group company. This change will have effect for disposals of shares in or securities of a company made on and after 22 November 2017. 

This was a budget of few surprises with very little announcements to changes in tax. 

Posted by
Jenny Strudwick
22 November 2017
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