ICAEW Tax Faculty provides analysis of the announcements relating to tax rates and allowances in the Spring Budget 2017.
The Tax Faculty will be publishing an updated version of our tax rates and allowance TAXguide.
The intention to increase the personal allowance to £12,500 by the end of the current parliament was confirmed.
The personal allowance in 2016/17 is £11,000. As previously announced, this will increase to £11,500 for 2017/18.
The intention to increase the higher rate tax threshold to £50,000 by the end of the current parliament was confirmed.
The income tax 20% basic rate band for 2016/17 is £32,000 (with a 0% starting rate band of £5,000 for savings income in certain circumstances).
As previously announced the 20% basic rate limit will increase to £33,500 for 2017/18. As a result, the higher rate threshold (ie, the personal allowance plus the basic rate band) is £43,000 in 2016/17 and will be £45,000 in 2017/18.
|Year||Standard personal allowance||Basic rate 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) which was introduced from April 2016 is to be reduced to £2,000 from April 2018. See the Personal and employment taxes section.
The NIC upper earnings limit remains aligned with the higher rate threshold.
For the self-employed, class 2 NIC will be abolished from April 2018 and there will be an increase in the rate of class 4 NIC. See the Business and company tax section.
The CGT annual exemption for 2017/18 will be £11,300 (£5,650 for most trustees).
The rate of corporation tax is currently 20%. As previously announced it will be reduced to 19% from April 2017 and to 17% from April 2020.
The VAT registration threshold will increase from £83,000 from April 2017. For details, see the VAT section.
|Download the full report|