National Insurance
The National Insurance threshold for employers ( secondary ) and employees ( primary ) will be aligned from April 2017 , meaning that both employees and employers will start paying National Insurance on weekly earnings above £ 157 . The currently weekly threshold for 2016 / 17 is £ 156 for employers , and £ 155 for employees . As announced in the last Budget , Class 2 National Insurance contributions will be abolished from April 2018 . Self-employed contributory benefit entitlement will be accessed through Class 3 and Class 4 NICs .
Chargeable events gains
As announced in the Budget and following consultation , the government will legislate to avoid the disproportionate tax charges that arise in certain circumstances from life insurance partsurrenders and part-assignments . The legislation will allow applications to be made to HMRC to have the charge recalculated on a just and reasonable basis to allow fairer outcomes for policyholders . The change will take effect from 6 April 2017 .
The government will also legislate to give HMRC the power to amend the list of assets that Personal Portfolio Bond policyholders can invest in without triggering tax anti-avoidance rules . The changes will take effect on Royal Assent of Finance Bill 2017 . Non-domiciled individual .
The government will consider how benefits in kind are valued for tax purposes , and the use of Income Tax relief for employees ’ business expenses , including those that are not reimbursed by the employer .
Tax avoidance
The government is continuing its review into the use of disguised remuneration schemes by employers and employees and proposes to extend these provisions to include the use of such schemes by the self-employed . No further details are available at present .
As signalled in the Budget , the government will also consider the introduction of penalties for any person who has enabled another person or business to use a tax-avoidance arrangement that is later defeated by HMRC . Draft legislation to this effect will follow shortly . Importantly , these provisions will not apply to “ tried and tested ” arrangements permitted by the legislation such as pensions , ISAs , VCTs , EISs etc ; as , to take effect , the arrangement has to be first “ challenged ” by HMRC .
The government will also introduce a new legal requirement to correct a past failure to pay UK tax on offshore interests within a defined period of time , with new sanctions for those who fail to do so . However , it is important to remember that , just because something is ‘ offshore ’ ( e . g . an offshore fund or an offshore bond ), this does not necessarily mean that it will be subject to attack .
Corporation Tax
The government confirmed its commitment to reduce the level of Corporation Tax to 17 % by 2020 .
Capital Gains Tax
The tax advantages linked to shares awarded under Employee Shareholder Status ( a special employee status where certain statutory employment rights are given up in exchange for shares ) will be abolished for arrangements entered into on , or after , 1 December 2016 .
Offshore funds
Investors with offshore reporting funds will no longer be able to deduct performance fees from the funds ’ reportable income for tax purposes . From April 2017 , fees will instead reduce any tax payable on disposal gains . Venture Capital Trusts ( VCTs ) and Enterprise Investment Schemes ( EISs ), and Seed Enterprise Investment Schemes ( SEISs )
ISA / Junior ISA limit
From April 2017 the ISA limit will rise to £ 20,000 , as previously announced . The Junior ISA limit will increase to £ 4,128 . The government also announced its intention to launch a new NS & I bond with a £ 3,000 limit and indicative 2.2 % gross interest rate growth over a three-year term .
Should you wish to discuss any of the detail contained in the note , please do not hesitate to get in touch .
Contact Paul Brady on 0121 355 2473 or email paul . brady @ sjpp . co . uk
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