The tax-free Personal Allowance, which is the amount you can earn before paying any Income Tax, will rise from £11,000 to £11,500 from April 6.
The move will mean basic rate taxpayers will take home an extra £100 a year.
The threshold for paying higher rate tax (40%) will move from £43,000 to £45,000 in England, Wales and Northern Ireland – giving this group an extra £400 a year.
However, for those in Scotland the higher rate threshold will remain at £43,000.
The Marriage Allowance is rising from £1,100 to £1,150 from April 6, 2017.
This tax break allows those that are married or in a civil partnership to transfer part of their tax-free personal allowance to their partner.
National Insurance Contributions
The new NIC thresholds for 2017/18 will be as follows:
Class 1 NICs (employees) – payable on income between £157 and £866 a week at 12%. Above £866 a week the reduced rate of 2% applies;
Class 2 NICs (self-employed) – will be payable on profits above £6,025 a year (up from £5,965) at a rate of £2.85 per week;
Class 3 NICs (voluntary) – will rise from £14.10 to £14.25 a week;
Class 4 NICs (self-employed) – payable on profits between £8,164 and £45,000 at 9%. Above £45,000 the reduced rate of 2% applies.
Capital Gains Tax
The tax-free allowance for Capital Gains Tax (CGT) – a levy on the profits made from the sale of assets – will rise from £11,100 to £11,300 from April 6, 2017.
New cars purchased from April 1, 2017 are subject to new first year tax based on CO2 emissions followed by a set standard rate thereafter.
Note that cars purchased with a list price of above £40,000 (fuel and electric) are subject to a £310 surcharge on top of the standard rate for five years (so in years two to six of owning the car).
VAT Flat Rate Scheme & Limited Cost Trader
From 1 April, 2017 HMRC have introduced a “limited cost trader” flat rate of 16.5%. The definition of a limited cost trader means that taxpayers who are mainly “commission” earners are likely to be caught by it.
A limited cost trader is one where the VAT inclusive expenditure on goods is either:
• Less than 2% of their VAT inclusive turnover in any VAT return period, or
• Greater than 2% but less than £1000 pa
Goods are not just products bought for resale but can include other tangible items. However, there are some exclusions:
Anything that has private use
• Capital items
• Food and drink
• Vehicle running costs
• Promotional items
This appears to leave goods as being products bought for resale and stationery!
If a taxpayer is caught by the new rules, they must use 16.5%, which will provide no gain.
If you need further information, please call us on 01926 422872 and we can discuss your particular situation with you.