Update 16th March 2017
16th March 2017
|Chancellor Phillip Hammond yesterday backtracked on his pledge to increase Class 4 NIC during this parliament. Therefore, the rates will continue as follows:
Class 2 NIC will still be abolished from April 2018 and we await news of how the Chanellor will fund the increased State Pension for the self-employed person.
Updates and changes taken from the recent Budget.
Personal Tax Rates and Allowances
The Personal Savings allowance of £1,000 for basic rate taxpayers commenced on 6th April 2016 for bank interest received. The banks will stop deducting tax on interest received from this date. The income is still declarable on tax returned with the balance over £1,000 being taxed accordingly.
From April 2017, a £1,000 allowance will be available for property and trading income whereby any income up to £1,000 will be tax free. For those with property or trading income over £1,000, you can either choose to deduct the relevant expenses of the £1,000 allowance to offset against the profit.
If you have savings income, the Savings Rate band of £5,000 remains and as long as you income is below £16,000 (2016/17) and £16,500 (2017/18) then this income will be tax free.
From 6th April 2016, dividend income was taxed in a new way. The rates of taxation are as follows:-
National Insurance Contributions (NIC)
Employed – weekly rates
From April 2018, Class 2 National Insurance will be abolished. Class 4 National Insurance will be reformed to include an entitlement to State Pension.
VAT Registration Threshold
From 1st April 2017, the registration threshold is £85,000 on a rolling 12 month basis.
Capital Gains Tax
The rates of Capital Gains Tax are unchanged as follows:-
Capital Gains from property sales will attract the old rates of 18% and 28%.
Corporation Tax Rates
The Stamp Duty payable on commercial property purchases changed on 17th March 2016 to the ‘slice-basis’. The rates are as follows:-
For residential properties, the rates are:-
From 1st April 2016, the Stamp Duty payable on the purchase of second homes will attract an additional 3% charge to the residential rates above.
Employee Termination Payments
From April 2018, termination payments (redundancy pay) above £30,000 paid to employees will attract employers National Insurance. The current rate is 13.8%.
Loans to Participators (Company Directors Loans)
From 6th April 2016, the tax paid on loans to participators (Company Directors) increased from 25% to 32.5%. This tax remains fully refundable once the loan has been repaid in full. The loan must be repaid from taxed income by the Company Director.
It is important to remember that if you no longer claim Child Benefit you must remain registered within the system in order to obtain your National Insurance Credits for your state pension, even if you do not receive any payments.