For notes on the Autumn Statement visit http://www.hhc-accountants.co.uk/blog/read_164806/autumn-statement-2016.html.
The items that may be of particular interest to clients are:
- confirmation of the increases in the personal allowance & basic rate tax band, effective from the 6th April 2017.
- the reduction in the Corporation Tax rate to 17% by 2020.
- an increase in the flat rate of VAT to 16.5%, which will affect clients with personal service companies.
Let us know if you have any queries on the notes.
The briefing has been provided by Croner Taxwise, our external Tax consultants and the providers our HMRC enquiry insurance policy.
Children’s income is theirs in their own right, no matter how young they are. They are also entitled to the full personal allowance. However for a child under the age of 18 and unmarried, this does not apply to income that comes directly or indirectly from a parent. Where it has come from the parent it is treated as the parent’s own income with the following exceptions:
1.Each parent can give each child sums of money from the total of which the child receives no more than £100 gross income per annum eg interest on bank or building society deposits. 2. If the income exceeds the limit, the whole amount and not just the excess over £100 will be taxed on the parent.
3. The National Savings ‘children’s bonds’ for under 16 year olds can be given in addition because the return on such bonds is tax exempt.
4. A parent may pay personal pension contributions of up to £3,600 a year on behalf of a child under the age of 18.
Parents may contribute towards a Child Trust Fund Account for their children.
A child includes a stepchild, an illegitimate child and an adopted child.
This is an extract from notes provided by Croner Taxwise
Clarification on the rules regarding vans & taxable benefits.
A van which is made available to an employee is deemed to be available for his private use unless the terms on which the van is provided prohibit its private use and no such use is actually made of it. This means that the mere prohibition of private use is not in itself sufficient to prevent a tax charge; it is also necessary to show that a van is not used for private motoring.
The charge is nil if both the following requirements are satisfied throughout the year (or part of the year depending on when the van is available to the employee):
-The van must only be available to the employee for business travel and commuting – it must not in fact be used for any other private purpose except to an insignificant extent, and
-The van must be available to the employee mainly for the employee’s business travel
If one of the requirements is not met the charge for 2015/16 is £3,150 and for 2016/17 the benefit increases to £3,170 per van.
The word ‘insignificant’ is not defined, so takes its normal meaning of ‘too small or unimportant to be worth consideration’. Private use is to be considered insignificant if for example an employee who uses a van:
-Takes an old mattress or other rubbish to the tip
-Regularly makes a slight detour to stop at a newsagent on the way to work
-Calls at the dentist on the way home
The above is an extract of notes provided by Croner Taxwise
Private use by an employee that is not insignificant is for example:
-Using the van to do the supermarket shopping each week
-Taking the van away on a week’s holiday
Using the van outside of work for social activities
From the 1st October 2016 the National Minimum Wage rates increase.
-21 – 24 year olds – NMW will increase from £6.70 to £6.95 per hour
-18 – 20 year olds – NMW will increase from £5.30 to £5.55 per hour
-Over compulsory school age but not yet 18 – NMW will increase from £3.87 to £4.00 per hour
-Apprentice rate (for apprentices under the age of 19 or 19 and over but in the first year of apprenticeship) – NMW will increase from £3.30 to £3.40 per hour
The National Living Wage is not increasing in October. As the NLW rate for those aged 25 and over was only introduced in April 2016 the current rate of £7.20 per hour will continue to apply until April 2017. The quoted increase from next April is £7.60 per hour but this has not yet been confirmed.
There were a number of changes in the budget which may be of interest to you:
CGT Rates Reduced
This measure reduces the 18% rate of CGT to 10% and the 28% rate of CGT to 20% for chargeable gains for individuals & trusts, except in relation to chargeable gains accruing on the disposal of residential property (that do not qualify for private residence relief).
The 10% rate applying to basic rate taxpayers & the 20% rate to higher rate taxpayers.
This measure will have effect for relevant gains accruing on or after 6 April 2016.
Further Corporation Tax Rate Cut
The measure reduces the CT main rate to 17% for the Financial Year beginning 1 April 2020.
This is in addition to the reductions announced in the 2015 budget;
Reductions in the CT rate from 20% to 19% for the Financial Years beginning 1 April 2017, 1 April 2018 and 1 April 2019, with a further reduction from 19% to 18% for the Financial Year beginning 1 April 2020 (now announced as reduced to 17%).
Personal Allowance & Tax Thresholds
Further increases in the personal allowance & higher rate tax threshold announced and effective from the 5 April 2017.
The tax free personal allowance currently £11,000 for the tax year 2016/17 to increase to £11,500 for 2017/18.
For 2016/17 the 40% higher rate of tax will apply to income in excess of £43,000. For 2017/18 this limit to be increased to £45,000.
Class 2 NIC
Class 2 NIC contributions to end in April 2018.
VAT Registration Limit
The VAT registration & deregistration limits are up slightly.
This represents an inflationary adjustment only increasing the registration limit from £82,000 to £83,000 and the deregistration limit from £80,000 to £81,000.
The limits represent the annual turnover limits and the change is effective from the 1 April 2016.
Please do contact us should you wish to discuss these or any other matters further.
We are currently in the process of assisting a number of clients in setting up pension schemes to offer to their staff, in accordance with the requirements of the ‘auto-enrolment legislation’.
You may already have this in hand for your employees or the staging date may still be some time away. If however you do require any advice or assistance then please do let me know.
For those clients we are helping we are using the NEST scheme which is a straightforward & transparent Government backed scheme, which does allow employees to easily see how their fund is growing. The scheme is also transferable if they were to move employment.
You can obtain more details of the scheme from the following link.
Alternatively, if you have already set up a scheme with a pension company, then we can provide assistance with the necessary documentation to be sent out to employees.
Let us know if you have any queries & if needs be a meeting can be arranged to discuss in more detail.
The 100% FYA on the purchase of new, low-emission cars will be extended until 31 March 2018 (for corporation and income tax purposes). The qualifying threshold will also be reduced to 75g/km from 1 April 2015 via statutory instrument early next year.