Rochford Accountants, Trueman Brown, are a small firms of accountants who believe in keeping their clients up-to date with the latest developments.
The start of any fiscal year sees the enactment of a number of changes to the UK Code and April 2017 is no different to others.
Below is a list of changes that clients should be aware of:-
INCOME TAX – RATES AND RELIEF
From 6th April 2017, the personal allowance will increase to £11,500 and the basic rate limit is £33,500.
The basic rate limit for Scottish taxpayers is lower at £31,500.
CAPITAL GAINS TAX – RATES AND RELIEFS
From 6th April 2017, the annual tax exemption for individuals is £11,300 and for trust £5,650.
Gains will be taxed as follows:-
|Basic Rate Taxpayers||Higher and Additional Rate Taxpayers|
|On Residential Property and carried interest||18%||28%|
INHERITANCE TAX – RELIEFS
April 2017 sees the phasing in of the “main residence nil rate band” or the “family home allowance” which is in addition to the existing tax-free inheritance tax allowance of £325,000.
The allowance is available to those passing on their main residence to a direct descendant.
For 2017/18 the allowance will be £100,000 and will rise in increments of £25,000 each fiscal year until it reached £175,000 in 2020/21.
CORPORATION TAX – RATES
The Corporation Tax rate for the year ended 31st March 2018 will be 19%. The rate will eventually fall to 17% from April 2020.
April 2017 sees a change in the law regarding the domicile of a taxpayer.
The new law states that any taxpayer that any taxpayer who has been resident in the UK for 15 out of the last 20 years will now be considered domiciled for tax purposes on the 16th year of residency.
This will include years where the taxpayer was a minor (i.e. under 18 years of age).
The consequences of this change is that:-
- The taxpayer will no longer be able to use the remittance basis of tax;
- The taxpayer can no longer elect to become non-domiciled on a permanent basis.
VAT – RATES AND RELIEFS
VAT rates are unchanged.
However, from 1st April 2017, the registration threshold will increase to £85,000 and the related de-registration threshold will increase to £83,000.
There is also a major change to the flat rate scheme with the introduction of the “low cost trader” category.
PENSIONS – MONEY PURCHASE ANNUAL ALLOWANCE
From 6th April 2017, there will be changes to the Money Purchase Annual Allowance (MPAA).
This allowance applies to scheme members who have already accessed their pensions but wish to continue making contributions.
The maximum contribution limit for such scheme members will reduce to £4,000 per annum.
PENSIONS – PENSION ADVICE ALLOWANCE
From 6th April 2017, the Pension Advice Allowance was introduced. Taxpayers can take up to £500 from their money purchase scheme, on a tax-free basis, to pay for financial advice on retirement.
Taxpayers will be permitted three uses of the allowance but only once in any fiscal year.
PRIVATE BUY-TO-LET INVESTORS
From 6th April 2017, investors will be unable to offset the cost of mortgage interest against rental income.
For 2017/18, only 75% of the mortgage interest will be deductible.
From 6th April 2017, the Lifetime ISA (LISA) will be introduced.
The LISA has a dual purpose in helping to fund a first-time property purchase and for retirement.
Taxpayers under 40 years of age will be able to contribute up to £4,000 per annum with a bonus of 25% added by the Government.
TAX-FREE CHILDCARE SCHEME
The new scheme will be launched on 28th April 2017 and will be phased during 2017.
Parent of children under the age of 2 will be able to join the scheme first. Eventually the scheme will be open to working parents with children aged under 12 or aged under 17 if the child has a disability.
Parents who open a tax-free childcare account will receive £2 from the government for every £8 they pay in. The maximum government top up is £2,000 per child per year or £4,000 if the child has a disability.
Parents of children aged between 3 and 4, will, from September 2017 onwards, be able to apply for 30 hours free childcare.
From April 2017, ISA allowance will increase to:-
- £20,000 for adults;
- £4,128 for Junior ISAs.
BUSINESS PREMISES RENOVATION ALLOWANCES (BPRA)
BPRA was an 100% allowances given to taxpayers who invested in the converting or renovation of unused business premises in a disadvantaged area.
This allowance which was enacted in April 2007 ended on 31st March 2017.
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