Autumn Statement 2016
The Chancellor of the Exchequer Philip Hammond delivered his first and final Autumn Statement recently. The speech contained a variety of previously leaked measures along with a few surprises.
In this blog post, Gorilla Accounting will be reviewing the Autumn Statement in relation to contractors identifying what the changes mean as we move into 2017.
Autumn Statement Key Points for Contractors
- The income threshold to be raised to £11,500 in April 2017 which was announced in the Summer Budget. The income threshold is expected to increase to £12,500 by 2020.
- Higher rate income tax threshold to rise to £45,000 in 2017 and increase to £50,000 by 2020.
- Employee and employer National Insurance thresholds to be the same at £157 per week from April 2017.
- New three-year NS&I Investment Bond available from spring 2017. This will allow you to deposit up to £3,000 with an interest rate of 2.2%. There will be more information in relation to this in the Budget next year.
- 0% income savings rate band will remain at £5,000 for 2017/18.
- The Money Purchase Annual Allowance will be reduced to £4,000 from April 2017.
- Increase in the ISA limit from £15,240 to £20,000 in April 2017.
- The government will strengthen sanctions, deterrents and will take further action on disguised remuneration tax avoidance schemes to tackle tax avoidance.
- The government will address off-payroll working rules. The government’s plan is to make public sector organisations determine the IR35 status of an engagement rather than the contractor’s company itself deciding whether the contract falls inside or outside of IR35. If you are caught inside IR35, the 5% allowance will also be removed for those working within the public sector.
- Corporation tax to fall to 17% by 2020 as outlined in the Summer Budget.
- The government will invest over £1 billion in digital communications by 2020/21 to support the market to roll out full-fibre and future 5G communications.
- Redundancy payments over the exempt amount of £30,000 will be subject to employer NIC’s from April 2018.
- For VAT flat rate, the government will introduce a new 16.5% rate from 1st April 2017 for businesses with limited costs, such as many labour-only businesses. This is expected to roll out in the private sector following a consultation.
- No changes to dividends tax.
- New Housing Infrastructure Fund of £2.3 billion by 2020/21.
- The government will be publishing its response, in 2017, to the Making Tax Digital consultations and provisions to implement the previously announced changes.
- The tax and employer National Insurance advantages of salary sacrifice schemes will be removed from 2017, except for arrangements relation to pensions, childcare, Cycle to Work and ultra-low emission cars.
- The fuel duty rate will remain frozen for the seventh successive year, saving motorists £130 a year compared to what they would have been paying under the pre-2010 escalator.
For more information regarding the Autumn Statement make sure to keep up to date with the Gorilla blog for more relevant stories. Alternatively, click here to read the Autumn Statement in full.