Below is a summary of the main points announced by the Chancellor of the Exchequer in the Autumn Statement.
Please note that every care has been taken in preparing this summary but no responsibility can be accepted for loss occasioned to any person acting or refraining from acting as a result of the material herein.
Income Tax 2016/17
- Personal tax-free allowance is to be increased from £10,600 to £11,000 (restricted for income in excess of £100,000).
- The personal savings allowance will give basic rate taxpayers £1,000 and higher rate taxpayers £500 of tax free savings income.
- The first £32,000 of taxable income is to be taxed at 20% (or 7.5% for dividends).
- The next £118,000 is taxable at 40% (or 32.5% for dividends). The balance over £150,000 is taxable at 45% (or 38.1% for dividends).
- The first £5,000 of dividend income will be free of tax.
- The tax rate applicable to trust income (excluding dividends) is 45%.
Transferable Personal allowance
- Married couples and civil partners will be able to transfer £1,100 of their income tax personal allowance to their spouse for 2016/17, an increase of £40 from 2015/16.
Note: this transfer is available where neither spouse is a higher or additional rate taxpayer.
Further details of the Apprenticeship Levy announced at Summer Budget 2015 have been announced. The levy, which is designed to fund the Government’s apprentice programme, will come into effect in April 2017.
The levy will apply to every employer and will be at a rate of 0.5% of an employer’s pay bill. However, a £15,000 allowance for employers will mean that the levy will only be paid on employers’ pay bills over £3 million per year and so most employers will not be affected.
The Small Business Rate Relief scheme will be extended for a further 12 months from 1 April 2016. In the longer term, business rates will be determined by local government and councils will be given the power to cut rates to make their area more attractive to business.
Stamp Duty Land Tax
The Chancellor announced that from 1 April 2016 there will be an increase of 3% on the rate of Stamp Duty Land Tax charged on purchases of buy to let properties and second homes.
There is a consultation on the detailed application of this policy, including whether there will be an exemption for corporate ownership of buy to let properties.
Individual Savings Accounts (ISAs)
For 2016/17 the annual investment limit is frozen at £15,240.