PAYROLL INSIGHT
Autumn Statement 2016
The CIPP’s policy team provide a summary of key announcements
T he Chancellor of the Exchequer, Philip Hammond, delivered his first and last Autumn Statement on 23 November 2016. It was announced that the Government would be moving towards having one main annual fiscal event. So, after the Budget in spring 2017, Budgets will be delivered in the autumn with the first one taking place in autumn 2017. The Office for Budget Responsibility will produce a spring forecast from spring 2018 and the Government will make a Spring Statement responding to that forecast. A draft Finance Bill 2017 was published shortly after the Autumn Statement and includes many of the following measures. Tax rates and thresholds Income tax rates, bands and allowances for tax year 2017–18 are unchanged from the figures announced at Budget 2016. The personal allowance will rise by £500 to £11,500 and the threshold for paying tax at the higher rate will increase to £45,000. The married couple’s allowance income limit increases by £300 to £28,000 and the marriage allowance (transferable tax allowance) increases by £50 to £1,150. The blind person’s allowance increases by £30 to £2,320. The UK’s income tax rates remain at 20%, 40% and 45%. The commitment for the personal allowance and higher rate threshold to reach £12,500 and £50,000 respectively by the end of the current Parliament is to be held. Once the personal allowance reaches £12,500 it will then rise in line with consumer price indexation as the higher
will increase by £12 to £610. The van benefit charge will increase by £60 to £3,230. To encourage the purchase of ultra- low emission vehicles, the Government confirmed the introduction of new, lower bands for company car tax in tax year 2020–21. The appropriate percentage list price subject to tax will increase by 1% for cars with CO2 emissions greater than 90 grams per kilometre in 2020–21, with a 3% differential between the lower emissions bands. The maximum company car tax will remain at 37% into the 2019– 20 tax year and the 3% diesel supplement remains in place until April 2021. consultation, the tax and employer NI advantages of salary sacrifice schemes will be removed from April 2017, except for arrangements relating to pensions (including advice), childcare, cycle to work and ultra-low emission cars. This will mean that employees swapping salary for benefits will pay the same tax as the vast majority of individuals who buy them out of their post-tax income. Arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021. ● Benefits in kind – The Government will consider how benefits in kind are valued for tax purposes, publishing a consultation on employer-provided living accommodation and a call for evidence on the valuation of “all other benefits in kind” Expenses and benefits ● Salary sacrifice – Following
rate threshold does, rather than in line with the national minimum wage. National Insurance ● National Insurance (NI) thresholds – The lower earnings limit increases from £112 to £113; the primary threshold and secondary threshold are aligned once more, increasing from £155/£156 to £157; and the upper earnings limit increases from £827 to £866. The upper secondary threshold for under-21s and the apprentice upper secondary threshold also increase to £866. NI rates remain unchanged. ● Class 2 NI Contributions (NICs) – As previously announced at Budget 2016, Class 2 NICs will be abolished from April 2018 and entitlement to contributory benefits for the self-employed will be accessed through Classes 3 and 4 NICs. ● Removing NI from the effects of the Limitation Act – From April 2018, the Government will remove NICs from the effects of the Limitation Act 1980 and the Northern Ireland equivalent. This will align the time limits and recovery process for enforcing NI debts with other taxes. The Government will consult on the details. Cars and vans Car and van fuel charges and the van benefit charge increase by retail price indexation each year; the amounts for 2017–18 were announced in associated documents published alongside the Autumn Statement. The car fuel benefit charge multiplier will increase by £400 to £22,600 and the van fuel benefit charge
| Professional in Payroll, Pensions and Reward | February 2017 | Issue 27 20
Made with FlippingBook - Online magazine maker