Allowances and Rate Bands
- The Personal Allowance will increase from £11,000 in 2016/17 to £11,500 in 2017/18.
- The Basic Rate Limit will increase from £32,000 in 2016/17 to £33,500 in 2017/18.
- The Higher Rate Threshold will increase from £43,000 in 2016/17 to £45,000 in 2017/18.
- From 1 April 2016, the VAT registration threshold will increase from £82,000 to £83,000. The deregistration threshold will increase to £81,000.
Capital Gains Tax
- With effect from 6 April 2016, the current rates of 28% and 18% are to be reduced to 20% and 10% respectively, except in relation to chargeable gains accruing on the disposal of residential property not qualifying for private residence relief and carried interest.
Class 2 National Insurance Contributions
- Class 2 contributions are set to be abolished from April 2018.
- The Corporation Tax rate will fall to 17% from 1 April 2020.
- Fuel duty has been frozen.
- The duty on beer, spirits and most ciders has been frozen. The duty on most wines and higher strength cider will increase by RPI from 21 March 2016.
- Duty rates on all tobacco products will increase by 2% above RPI from 6pm on 16 March 2016. £31m is going to be invested in a new group of Border Force and intelligence officers, who will specialise in seizures of illicit tobacco being smuggled into the UK.
HMRC Customer Service
- £71m is going to be invested to make it quicker and easier for individuals and small businesses to deal with HMRC. A new secure email service, phone lines and Webchat, open 7 days a week, are promised from April 2017.
- HMRC’s predictive analytics capability is going to be developed to identify emerging insolvency risk, enabling targeted debt recovery action to minimise losses before taxpayers become insolvent.
Insurance Premium Tax
- The standard rate will increase from 9.5% to 10% with effect from 1 October 2016.
- The overall annual limit will rise from £15,000 to £20,000 from 6 April 2017.
- A new Lifetime ISA will be available from April 2017 for adults under the age of 40. They will be able to contribute £4,000 per year and receive a 25% bonus from the government. Funds can be used to buy a first home from 12 months after the account opening and be withdrawn from the age of 60.
Making Tax Digital
- From 2018, businesses, self-employed people and landlords who are keeping records digitally and providing regular digital updates to HMRC will be able to adopt pay-as-you-go tax payments.
Soft drinks sugar tax levy
- The levy will be charged from April 2018 on volumes according to total sugar content, with a main rate charge for drink above 5 grams of sugar per 100 millilitres and a higher rate for drinks with more than 8 grams of sugar per 100 millilitres.
Tax Allowances for the sharing economy
- From April 2017, there will be two new tax-free £1,000 allowances – one for occasionally selling goods or providing services, and one for income from property. People who earn up to £1,000 from occasional work will no longer need to pay tax on that income. The first £1,000 of income from property, such as from renting a driveway, will also be tax-free.
Tax Avoidance and Evasion
- HMRC’s yield target has increased to £27bn for 2016/17.
- Summer consultations are going to take place to tackle the Hidden Economy. These will involve discussion surrounding new powers for HMRC to gather data held by Money Service Businesses, the principle of making access to licences or services for businesses conditional on them being registered for tax and, finally, on sanctions for those who repeatedly and deliberately participate in the Hidden Economy.
- New legislation will allow HMRC to raise an assessment of a person’s Income Tax or Capital Gains Tax liability without them first being required to file a Tax Return, where it holds sufficient information about that individual to make the assessment.
Author: Guy Smith, Tax Investigations Manager