Welcome to the New Tax Year 2017-2018
Congratulations! You have successfully made it through the financial year 2016/2017. This is no easy feat, so make sure you take the time to celebrate your successes. And as soon as you have finished celebrating, we are here to make sure that this year is even more successful than the last.
In the world of finance the rules are ever changing. So, to start the new year off, we wanted to take a few moments of your time to ensure that you are aware of any changes that may affect you and your business. Over the coming weeks, we will update you in more detail (give you a bit of time to finish those celebrations) but in the meantime, here is a brief update of the changes afoot.
2017/2018 Personal Allowance
The personal allowance amount is increasing to £11,500 for everyone. The 2017/2018 tax code is 1150L. So, during 2017-18, you will need to earn over £11,500 before you pay any income tax. This changes the basic and higher rates of income tax for the 2017/2018 tax year as follows:
|2016-17 tax year||2017-18 tax year|
|Basic Rate limit||£32,000||£33,500|
|Higher rate threshold||£43,000||£45,000|
- The higher rate tax threshold will increase to £50,000 by the end of the parliament.
National Living Wage
These rates are for the National Living Wage and the National Minimum Wage. The rates change every April. One of the important jobs in preparation for the new year is to check that all members of the team are being paid above the new thresholds.
|Year||25 and over||21 to 24||18 to 20||Under 18||Apprentice|
Employment Allowance will be increasing from £2,000 to £3,000. As a result, you will not be required to pay Employers National Insurance until you reach this new threshold. Click here for more information
Paying yourself in the most tax efficient way
For business owners with no other sources of income, there will be no change to the generally advised amount of salary to pay yourself each month, which remains at £671 in 2017/18. But of course everyone’s circumstances are different so we would always recommend that you ask your advisor to confirm.
Employ Staff? This is what you need to know
From April 2017, the use of salary sacrifice will no longer be allowed, with a few exceptions. Ultra-low emission cars, childcare schemes, pension contributions & the cycle-to-work scheme. Some of the benefits will be phased out also. Long-term schemes covering accommodation, school fees and cars already in place will be protected until April 2021. Any arrangements in place prior to April 2017 will be protected until April 2018.
- For a lower rate taxpayer paying £50 per month under the current salary sacrifice, this will constitute an increase of £192 a year in Tax and National Insurance. Equally, for the employer, this leads to an increase of £82.80 a year.
- For a higher rate taxpayer paying £50 per month under the current salary sacrifice, this would mean an increase of £252 a year in tax and National Insurance. The increase for the employer is the same for both rates at £82.80 a year.
(This can be complex, so if you need more information then contact us)
Employer National Insurance (NI) is changing. From April 2017, the threshold for Employer and Employee NI will be the same at £157 per week. This alignment of the thresholds will come at an extra cost to businesses: a maximum of £7.18 per employee per year.
For businesses looking for investment, there is good news. Funding to the tune of £400m has been made available for start-ups through various funding circles.
Looking to export? Again, great news for you, as the Chancellor has announced a doubling of UK Export Finance capacity.
(Grab a coffee and click here to find out where and how you can access these pots of gold)
Electric Car Owners
There are so many benefits for business owners to use ultra-low emission electric cars. There are many levels of Tax for these types of Vehicles and 2017/18 is going to be no different and on top of that there’s now a 100% first year capital allowance for installing electric car charge points. This topic can get quite complex so click here to read in depth on how having an electric car can be kind on your pocket as well as on the planet.
Savings and Investments
You are now in the last few months of being able to use up this year’s ISA allowance, the deadline being 5 April 2017. The total allowance is £15,240.
The government are also to announce a market-leading savings bond in the next Budget. It is expected to pay 2.2% gross interest with a 3-year term. This will have a £3k maximum deposit attached.
If you have questions on any of the above then please contact us.
Thanks and best wishes