The new Chancellor gave his first Statement on 24 November 2016. Here are some points of interest for small businesses and individuals:
1. Personal tax – rates and allowances
Personal Basic Additional
Allowance rate band rate
2016/17 11,500 32,000 150,000
2017/18 11,500 33,500 150,000
2. Corporation tax
The rate, currently 20%, will reduce to 19% in 2017 and 17% in 2020.
3. VAT Flat Rate Scheme
A new 16.5% rate for “limited cost traders” will reduce the attractiveness of the scheme for businesses which have limited input VAT on expenses.
4. Class 2 National Insurance
Will be abolished from April 2018. Those who are self-employed with income below the threshold will be able to make voluntary contributions to maintain their contribution record for the purposes of the State Retirement Pension.
5. Salary sacrifice
Salary sacrifice arrangements are to be phased out except for pension, child care vouchers, cycle to work and ultra low-emission cars.
Removal of permanent domicile status from April 2017. Anyone resident in UK for 15 out of last 20 years will be deemed UK-domiciled for all taxes. Anyone with a UK domicile of origin will be immediately UK-domiciled upon returning to the UK.
7. National Living Wage
The national living wage will rise from £7.20 to £7.50 from April 2017.
8. NS&I Investment Bond
A new three-year savings bond will be offered by National Savings and Investment with a rate of 2.2% and a maximum investment limit of £3,000.
Please contact Don Fisher if you would like to discuss the effect of any of these changes.