What Does the Autumn 2017 Budget Mean for You?
The autumn 2017 budget brought with it a raft of tax changes, some major and some minor, but
all with the possibility to impact the financial standing of individuals and companies. The team at
business.
Taxes on income
The personal allowance for income tax increases to £11,850 from £11,500 and the higher-rate
threshold is increased from £45,000 to £46,350.
NB: These rates will apply outside of Scotland. Income tax is now a devolved power and the
Scottish government is currently holding a consultation on the matter, the outcome of which may
be that they set income tax at significantly different levels to the rest of the UK.
The abolition of Class 2 NICS (for the self-employed) and the increase in the rates payable on
class 4 NICS have both been delayed for a year, so the government can assess their impact on
contributory benefits, by which it appears that they mean pensions. In simple terms, people who
only earn a low income from self employment (currently up to a maximum of £6,024), can
choose to pay Class 2 NICS so as to increase their number of qualifying years for the (new)
state pension.
If Class 2 NICS are simply abolished, these people will have to move to Class 3 NICS if they
wish to continue making contributions to their state pension. Class 3 NICS are significantly more
expensive than Class 2 NICS (at current time Class 2 NICS cost £148.20 per year, whereas
Class 3 NICS cost £741 per year), which would be a significant increase for those earning the
least from self employment. Given that politicians of all persuasions are largely agreed on the
importance of encouraging people to save for retirement, the issue of Class 2 NICS could well
be a case of “watch this space”…
Making tax digital
Individuals and freelancers who complete income tax returns will not be required to comply with
the Making Tax digital reforms until April 2020 at the earliest (provided that freelancers are
below the VAT threshold). VAT-registered traders will need to switch to the new system in April
2019.
VAT
While the chancellor opted to freeze the threshold for VAT registration rather than increasing it
by around £2K as is customary, he did not actually reduce it at this point as some had feared.
He did, however, commit to consulting on reforms to the existing VAT framework.
ISAs
The limit for ISA savings was also frozen, at £20K. There was, however, an exception for Junior
ISAs where the limit was increased to £4,260, in step with inflation.
Housing
While the Stamp Duty Land Tax (SDLT) bands remain untouched, first-time buyers will now be
exempt from paying any stamp duty on the first £300,000 of the purchase price of any home
costing up to £500,000.
As with income tax, Scotland has its own devolved powers in this area and it is yet to be seen if
the Scottish government will follow suit here. It should also be noted that housing is due to be
devolved to the Welsh Assembly, which could then choose to make changes if it so wished.
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