Today the Chancellor of the Exchequer gave what he described as the ‘final’ Spring Budget (the Budget event is being moved to the Autumn). All in all, it can be considered a relatively quiet Budget Day with respect to private client taxation, which most practitioners and clients will welcome given the raft of significant changes being brought in from April 2017 in relation to non-UK domiciled individuals, the taxation of offshore trusts and UK residential property held via offshore structures. Please click here to see our previous blog.
Key Taxation Measures Announced
- Class 4 National Insurance Contributions (NICs) will increase from 9% to 10% in April 2018, and to 11% in April 2019 – this will likely affect self-employed individuals, partnerships and Limited Liability Partnership (LLP) members.
- From 2018 Class 2 NICs will be abolished.
- The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018 – this may affect owner-managers of limited companies who remunerate themselves via dividend and investors with significant share portfolios (this measure will not affect ISAs).
- There is due to be a 25% ‘transfer charge’ for transfers into Qualifying Recognised Overseas Pensions Schemes (QROPS). This measure is designed to prevent individuals from moving their pension wealth overseas to reduce their tax payable. It is understood that there will be exceptions where the individual and the pension are both located in the European Economic Area (EEA).
- HMRC are due to publish guidelines for employers who make payments of ‘image rights’ to their employees.
- The annual ISA allowance will increase to £20,000 pa.
- As announced previously, corporation tax will continue to fall to 19% in April 2017 and to 17% in April 2020.
There was also a focus on tackling tax avoidance and evasion, Philip Hammond announced to the Commons that “we have secured £140 billion in additional tax revenue by taking robust action to tackle avoidance, evasion, and non-compliance.” He also then went on to reiterate that “from July we will introduce a tough new financial penalty for professionals who enable a tax avoidance arrangement that is later defeated by HMRC.”
If you would like to learn more or should have any questions please do not hesitate to contact any of the Tax team.
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