As you can expect with a Budget announcement, the devil is in the detail and the CIPP policy team will continue to bring you further news over the coming days. In the meantime, please read on for our summary of the key announcements.
Tax rates and thresholds
Income tax
The Conservative Party’s manifesto included a commitment to set the Personal Allowance for tax-free income at £12,500 and the Higher Rate Threshold (HRT), when higher earners start to pay 40% tax, at £50,000 by 2020.
However, following positive forecasts from the OBR, the Chancellor announced that these figures will come into force a year earlier than originally intended and will now take effect for the 2019-20 tax year and remain in force for the 2020- 21 tax year. This means that a typical basic rate taxpayer will pay £1,205 less tax in 2019-20 than in 2010-11. From April 2021, both the Personal Allowance and HRT would return to annual increases that are in line with CPI inflation (as currently legislated for). Documents published alongside the Budget Statement confirmed other allowances for the 2019-20 tax year; the Marriage Allowance (also known as the Transferable Tax Allowance) will increase to £1,250, the Married Couple’s Allowance will increase to a maximum of £8,915 (minimum £3,450) and the Blind Person’s Allowance will increase to £2,450.
These changes apply to non-savings, non-dividend income in England, Wales and Northern Ireland, and to savings and dividend income in the UK. UK income tax rates remain unchanged.
Devolved income tax
The Scottish Government is responsible for setting the income tax rates and thresholds that apply to Scottish taxpayers. Wednesday 12 December is the date that has been set for the 2018 Scottish Budget.
The Welsh Government is responsible for setting Welsh Income Tax rates from April 2019, for the first time. These are based on the UK rates: 10p in the pound is removed from each UK rate and the relevant Welsh rate is added. The Welsh Government has announced its intention to set Welsh rates at 10p in the pound for the 2019-20 tax year, so that the net effect for Welsh taxpayers is that they are subject to the same basic, higher and additional rates as taxpayers in England and Northern Ireland. Confirmation is expected in December.
Company cars, vans and fuel
The Budget Statement confirmed that figures for the company car fuel benefit charge and the van fuel benefit charge will increase in line with RPI and the van benefit charge will increase in line with CPI.
Documents published alongside the Budget Statement confirm that the multiplier for the car fuel benefit charge will increase to £24,100 (from £23,400), the flat-rate van fuel benefit charge will increase to £655 (from £633) and the flat- rate van benefit charge will increase to £3,430 (from £3,350). The van benefit charge for zero-emission goods vehicles increases from 40% to 60% of the standard charge from April 2019, as previously announced. The diesel supplement for the Company Car Tax appropriate percentage remains at 4%, subject to a maximum appropriate percentage of 37%. Cars that meet the Euro 6d standard (also known as Real Driving Emissions Step 2, RDE2) are exempt.
Apprentices
Transferring levy funds
Confirmation was given of the announcement made at the Conservative Party conference last month that from April 2019 levy-paying employers will be able to transfer up to 25% of their funds to pay for apprenticeship training in their supply chains.
Contribution to funding costs halved for non-levy paying employers
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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