ICAEW Tax Faculty provides analysis of the announcements relating to tax rates and allowances in the Autumn Budget 2017.
The intention to increase the personal allowance to £12,500 by 2020 was confirmed.
The personal allowance in 2017/18 is £11,500. This will increase to £11,850 for 2018/19.
The intention to increase the higher rate tax threshold to £50,000 by 2020 was confirmed.
The income tax 20% basic rate band for 2017/18 is £33,500 (with a 0% starting rate band of £5,000 for savings income in certain circumstances).
The 20% basic rate band will increase to £34,500 for 2018/19. As a result, the higher rate threshold (ie, the personal allowance plus the basic rate band) which is £45,000 in 2017/18 will be £46,350 in 2018/19.
|Year||Standard personal allowance||Basic rate band of 20% on income||Higher rate threshold||Additional rate of 45% on income over|
(*A lower higher rate threshold applies to earned income of Scottish taxpayers.)
The tax-free dividend allowance of £5,000 (more correctly described as a dividend nil rate band) was introduced from April 2016. As announced in the March 2017 Budget this is to be reduced to £2,000 from April 2018. No further changes to the taxation of dividends were announced in the Autumn 2017 Budget and the rates remain at 7.5%, 32.5% and 38.1% depending on the level of income.
The NIC earnings limits have been uprated. The lower earnings limit will increase from £113 to £116 per week from April 2018. The primary and secondary thresholds will increase from £157 to £162 per week. The upper earnings limit will increase from £866 to £892 per week from April 2018.
For the self-employed, as announced earlier in November 2017, class 2 NIC will be abolished from April 2019 rather than April 2018 as previously planned. In the meantime the rate of class 2 increases to £2.95 per week from April 2018 (2017/18: £2.85) and the small profits threshold remains unchanged at £6,205 per annum. The lower and upper profits limits for class 4 NIC will increase from April 2018 to £8,424 (2017/18: £8,164) and £46,350 (2017/18: £45,000) respectively.
The CGT annual exemption for 2018/19 will be £11,700 (£5,850 for most trustees). This is an increase from £11,300 for 2017/18. There are no changes to the rates of CGT.
See the section on Property tax for details of stamp duty land tax (SDLT) and annual tax on enveloped dwellings (ATED).
The lifetime allowance for pension savings will be £1,030,000 in 2018/19.
The rate of corporation tax is currently 19%. As previously announced it will be reduced to 17% from April 2020.
The VAT registration threshold will remain frozen at £85,000 for two years until April 2020. For details see the section on VAT and duties.