The Chancellor Philip Hammond presented his first Autumn Budget on Wednesday 22 November 2017.
His report set out a number of actions the government will take including support for more housebuilding. His view is that the economy continues to grow and continues to create more jobs. The major attention-grabber was aimed at first time buyers who will not have to pay Stamp Duty Land Tax on homes costing up to £300,000.
Our summary focuses on the tax measures which may affect you, your family and your business. To help you decipher what was said we have included our own comments. If you have any questions please contact us for advice.
Main Budget tax proposals
Our summary concentrates on the tax measures which include:
- increases to the personal allowance and basic rate band
- more tax relief for investment in certain Enterprise Investment companies
- proposed changes to Entrepreneurs’ Relief
- improvements to Research and Development tax credit regimes
- VAT limits frozen for two years
- support for businesses to cope with the effects of business rates revaluation and the so called ‘staircase tax’.
Previously announced measures include:
- plans for Making Tax Digital for Business
- the reduction in the Dividend Allowance
- changes to NICs for the self-employed
- capital allowance changes for cars from April 2018.
Our Autumn Budget 2017 summary focuses on the issues likely to affect you, your family and your business. To help you decipher what was announced we have included our own comments. If you have any questions please do not hesitate to contact us for advice.
In a new report, the Confederation of British Industry (CBI) has urged UK businesses to adopt ‘tried and tested’ technologies in order to help reduce inequality between productivity and pay.
The CBI argued that the adoption of technologies by UK firms could add more than £100 billion to the UK economy, and could potentially support a 5% reduction in income inequality.
The business group suggested that firms who fail to implement existing technologies and management practices ‘struggle to embed new skills’, and find it more difficult to export and allocate finance towards innovation.
In the report, the CBI called for the government to promote the adoption of proven technologies, such as cloud technology, mobile technology and cyber security, in its new Industrial Strategy. Funds should also be set aside to help support businesses in the UK to make use of these ‘readily available’ technologies.
Commenting on the matter, Carolyn Fairbairn, Director General of the CBI, said: ‘While the eyes of the business world can often be on ‘the next big thing’ in cutting-edge technology, too many firms are missing out on what’s right under their nose. Failing to adopt the nuts and bolts technologies of today is leaving a yawning gap in productivity and pay between businesses.
‘The UK needs more ‘magpie’ firms with the skill and the will to find and adopt tried and tested technologies and management practices that the best businesses showcase, and not get stuck in their ways.’
HMRC have issued the October 2017 Employer Bulletin which contains a number of articles relevant to employers on payroll related issues.
HMRC are advising that following the changes to the valuation of benefits in kind (BiK) where there is a cash option available, they will consult and then issue the necessary amendments to the PAYE Regulations. The guidance will also clarify the taxable amounts that need to be reported under Optional Remuneration and salary sacrifice arrangements.
Where a BiK is taken rather than the alternative cash option, the taxable value of the benefit is the higher of the cash foregone or the taxable value under the normal BiK rules. Transitional provisions apply for arrangements entered into before 6 April 2017.
The Bulletin also includes articles on:
- Changes to Business Tax Account for employers, including new data on the Apprenticeship Levy and the introduction of monthly and annual statement pages
- Data matters – ensuring RTI returns are submitted on or before the date the wages are paid, that the returns are accurate, cover all employees, including those that earn less than the National Insurance lower earnings limit
- Paying HMRC at the Post Office – via transcash. This option will be withdrawn from 15 December 2017
- Construction Industry Scheme – clarification of when CIS deductions should be reported via the Employer Payment Summary (EPS)
- Student Loans – new income thresholds from April 2018 for Plan Type 1 and 2 loans
- Apprenticeships benefit your business – includes links to help on finding apprenticeship training and recruiting an apprentice.
For help with payroll matters please get in touch.
Internet link: Employer Bulletin
On 14 December, the Scottish Budget will set out the Scottish Government’s financial and tax plans.
Currently taxpayers who are resident in Scotland pay income tax on their non-savings and non-dividend income at rates and thresholds determined by the Scottish Government. Scottish higher and additional rate taxpayers may pay more income tax than those with similar income in the rest of the UK. The Scottish Parliament is considering plans to radically revise the bands and possibly to introduce some further income tax rates so that middle and higher earners pay additional tax.
The Scottish Parliament are also expected to announce the details of Air Departure Tax which takes effect for flights from Scotland from April 2018.
We will keep you up to date with pertinent announcements.
Internet links: BBC news
The Criminal Finances Act 2017 took effect on 30 September 2017. It makes companies and partnerships, a ‘relevant body’, criminally liable if they fail to prevent the facilitation of tax evasion being carried out by an employee, anyone acting on their behalf or someone acting as an agent. If found guilty, the business could face unlimited fines and potentially further consequential sanctions within their industry or profession.
This Act has the effect of creating an offence at corporate and partnership level which does not require the directors/partners to have had any knowledge of the offence in question. Broadly, the offence is the failure to prevent the crimes of those who act for or on behalf of the corporate body or partnership instead of the need to attribute criminal acts to that body.
For a firm to be criminally liable under the new Act, there are three elements of the offence:
- There must be the execution of a criminal act of tax evasion.
- The crime must have been facilitated or carried out by a person associated with a relevant body.
- The relevant body failed to initiate adequate prevention procedures in relation to the act carried out by the associated person.
A defence is available when it can be shown that ‘reasonable prevention procedures’ were in place to prevent the associated person from committing or facilitating the crime; or that it would have been unreasonable or disproportionate to expect such procedures to be in place.
The government advises that any reasonable prevention procedures should be based on six guiding principles:
- Risk assessment – the relevant body should assess the nature and extent of its exposure to the risk of an associated person committing a criminal act;
- Proportionality – the procedures should take into account the nature, scale and complexity of the relevant body’s activities;
- Top level commitment – the management of the relevant body should be committed to preventing illegal acts and should foster a culture that tax evasion and its facilitation is never acceptable;
- Due Diligence – with appropriate procedures put in place with respect to all people who perform services for the relevant body;
- Communication – training staff and ensuring the message effectively gets across to all employees and agents;
- Monitoring and reviewing – ensuring that whatever procedures are put into place are regularly reviewed and updated and amended where necessary.
Please contact us if you require further information on this issue.
Internet link: GOV.UK Tackling tax evasion corporate-offence