Budget  

Budget tax changes: Everything you need to know

Budget tax changes: Everything you need to know

Spreadsheet Philip Hammond was on form again with announcing crackdowns on tax evasion, especially in the digital space and internationally.

But the chancellor did extend some tax reliefs to help with issues such as social care.

In his Budget speech, he expressed a "wider concern" about the tax system in the digital age.

Mr Hammond told the House of Commons: "This Budget takes action so everyone pays their fair share, including those seeking to evade or avoid tax using offshore structures.

"Along with the innovation and growth it brings, digitalisation poses challenges for the sustainability and fairness of our tax system. 

"But this challenge can only be properly solved on an international basis. And the UK is leading the charge in the Organisation for Economic Commerce and Development and the G20 to find solutions".

From April 2019, the UK will apply income tax to royalties relating to UK sales, when those royalties are paid to a low tax jurisdiction, even if they do not fall to be taxed in the UK under current rules. 

Moreover, the government is set to tackle online VAT fraud, which according to the chancellor costs the UK taxpayer £1.2bn a year.

To address this, Mr Hammond said the UK was making all online market places jointly liable for tax.

Although the chancellor did not mention social care in the one hour and two minutes he took to deliver his Budget, within the accompanying documents it did state the qualifying care relief and self-funded shared lives payments.

Qualifying care relief (QCR) is a tax simplification covering expenses incurred when providing care, which means carers only need to keep simple records. 

The documents stated: "The government will extend the scope of QCR to cover self-funded shared lives payments to encourage the use of shared lives care."

Elsewhere, Isa limits will remain unchanged at £20,000 for 2018 to 2019.

The annual subscription limit for Junior Isas and child trust funds, while the Libor charity funding scheme now brings the total of funding committed since 2012 to £773m.

Here is a handy table to help you get to grips with today's Budget tax changes. 

TaxChanges in Autumn Budget 2017Changes in 2017 BudgetChanges in 2016 Autumn Statement
Income tax and personal allowancesIn April 2018 as previously mentioned, personal allowance will rise to £11,850 and the higher rate threshold to £46,350. NEW: Government will now allow claims for marriage allowance in cases where a partner has died before the claim was made, and can be backdated for up to four years.Government continues with plans to increase personal allowance "by more than inflation" in 2017/2018. Personal allowance confirmed it will rise to £11,500, with a £2,000 increase to higher rate threshold.Gov't pledges to meet commitment to raising income tax personal allowance to £12,500 and the higher threshold to £50,000 by end of this parliament. Once it reaches £12,500, it will rise in line with CPI.
Dividend taxNo changes mentionedNEW: Government introduces a £3,000 reduction in the tax-free dividend allowance from £5,000 to £2,000.
Pension allowanceNo changes mentioned; as mentioned in the spring Budget the lifetime allowance will rise in line with CPI, to £1.03m for 2018-2019.No changes to MPPA proposals to reduce it from £10,000 to £4,000. No change to the LTA. Green Paper on Social Care promised. Master Trusts will see their tax registration process amended to align with the Pension Regulator's new authorisation and supervision regime.No changes announced to pensions allowance. However, Money Purchase Annual Allowance will be reduced to £4,000 from April 2017. From 6 April 2018, the government still intends to index the standard Lifetime Allowance annually in line with CPI.
Capital gains taxNo changes; as previously announced, the 30-day window between a capital gain arising on a residential property and payment will be deferred until April 2020.No mention of changes to CGT, despite calls from the buy-to-let industry asking for a least a tapered reduction in CGT, on properties owned for 10+ years.Tax advantages linked to employee shareholder status will be abolished for arrangements entered into on, or after, December 2016.
Bank levyGovernment has committed £36m more of banking fines over the next three years to support armed forces charities and other good causes.No changesBank levy charge will be restricted to UK balance sheet liabilities from 1 January 2021.
Inheritance taxNo changes mentionedStill no movement on the £325,000 threshold for IHTGov't confirms that from April 2017, IHT will be charged on UK residential property when held indirectly through an offshore structure
Corporation taxGovernment will increase R&D expenditure credit from 11 per cent to 12 per cent.Gov't commits to a R&D tax review with the publication of an Industrial Strategy Green Paper to drive up the level of private investment in science, research and innovation.Gov't pledges to uphold the 17 per cent cut and reduce burden of business rates by £6.7bn over next five years.
Tax on savings interestNo changeNo change - but beware the £3,000 reduction in Dividend Tax.Isa allowance rises will be as outlined by George Osborne in his Spring Budget in 2016. Gov't is to equalise tax treatment between offshore and onshore funds.
National Insurance ContributionGovernment will delay implementing a series of NICs policies by one year; it confirmed the government will no longer proceed with an increase to the main rate of Class 4 NICs from 9 per cent to 10 per cent.Class 2 Nics abolition has been confirmed by gov't. Main rate of class 4 Nics will rise from 9 per cent to 10 per cent in April 2018, and to 11 per cent in 2019.Proposals to end class 2 Nics
Stamp Duty Land TaxNew: reduction of upfront costs for first-time buyers by removing SDLT on properties up to £300,000 nationally and for London and the South East, the first £300,000 of properties worth up to £500,000

simoney.kyriakou@ft.com