With the new tax year started today 6th April 2017 there are some changes worth knowing.
It is the 6th April 2017 and the start of the new 2017/18 tax year. What does that mean for you and your business? Well there are changes that have come into play today and one that is beneficial is the personal tax allowance has gone up £500 to £11,500 and the higher income tax rate up £2k to £45k with basic rate up to £33,500. This means you will pay slightly less tax on your personal salary than last year.
Salary sacrifice reform will mean employees paying benefit in kind tax on items they would not have in the past and of course the employer paying employer NI on it too. These or on items such as health checks, parking, gym membership and mobile phones. No longer is it worth paying for the mobile phone through the business as it is not tax efficient and you would be better paying for it yourself. The ones that are not affected are pensions, child care vouchers and cycle to work scheme.
Apprenticeship Levy has been introduced to companies with a salary bill of £3m or more which is 0.5% of employment costs. There will be digital vouchers that employers can access to be spent on approved training courses.
Immigration skills charge is set at £1,000 per employee per year for non-EU skilled migrant employees with a tier-2 working visa. There are reductions for charities and small businesses and an exemption for PhD level expertise. It will be interesting to see if this will apply to EU citizens after Brexit.
Buy-to-let tax relief on mortgage interest is being lowered as part of the cut to a maximum 20% by 2020. A lot of landlords have been moving their properties to a limited company structure as this is unaffected by the change. The only bad thing is that existing homes transferred from an individual to company will more than likely trigger capital gains tax for the individual.
Life time ISA is designed for people to save for a house or retirement with the government topping it up by 25%. Those aged between 18 and 39 can save up to £4k a year and get a bonus up to £1k. The money is earmarked to buy either a first home worth up to £450k or withdrawn tax free after the age of 60.
ISA limits raised from £15,240 to £20,000 which can be invested in cash and share ISAs or Lifetime ISA.
Gender pay gap reporting rules will affect employers with more than 250 staff where they will need to show the difference in pay between men and women on the websites and a central government site. This makes it transparent to all. It will include hourly pay and bonus averages.
Tax credits and universal credit limits to two children going forward but not for those already with more than 2 children. So, those who already have 2 kids will not get anymore for subsequent kids born from 6th April 2017. Also, the extra £545 a year for newborn first children is scrapped.
Non-dom status scrapped for long-doms whereby “non doms” who have lived in the UK for at least 15 years of the past 20 years will be considered UK-domiciled for tax purposes.
The above are the highlights.
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