1. Income Tax personal allowance and higher rate threshold from 2018
The tax-free personal allowance will rise with inflation to £11,850 from April 2018The personal allowance – the amount you earn before you start paying income tax – will rise from £11,500 to £11,850. This means that in 2018-19, a typical taxpayer will pay £1,075 less income tax than in 2010-11.
As announced at Autumn Budget 2017, the government will increase the Income Tax Personal Allowance to £11,850 for the tax year 2018 to 2019. The basic rate limit will also be increased to £34,500 in 2018 to 2019. Changes to the basic rate limit will apply to England, Wales and Northern Ireland. Since April 2017, the Scottish Parliament sets the basic rate limit for Scotland. Taken together, these changes will increase the higher rate threshold, above which individuals in England, Wales and Northern Ireland pay income tax at 40%, to £46,350 in 2018 to 2019. The increases are based on the September 2017 Consumer Prices Index and will be introduced by statutory instrument later in 2017.
The National Living Wage and the National Minimum Wage will increase from April 2018The National Living Wage for those aged 25 and over will increase 4.4% from £7.50 per hour to £7.83 per hour from April 2018. Over 2 million people are expected to benefit. For a full-time worker, it represents a pay rise of over £600 a year.
2. VAT: maintain thresholds for 2 years from 1 April 2018
VAT: no change in registration and deregistration thresholds
As announced at Autumn Budget 2017, the VAT registration and deregistration thresholds will not be uprated for a period of two years. There will be no revisions to existing legislation and no new legal provisions will be introduced.
Therefore legislation will continue as follows:
- the taxable turnover threshold that determines whether a person must be registered for VAT will remain at £85,000
- the taxable turnover threshold that determines whether a person may apply for deregistration will remain at £83,000
- the registration and deregistration threshold for relevant acquisitions from other EU Member States will also remain at £85,000
The two year period ends on 31 March 2020. The government will consult on the design of the VAT threshold.
3. Extension of joint and several liability (JSL) on the online marketplaces and displaying VAT numbers online
As announced at Autumn Budget 2017, the government will legislate in ‘Finance Bill 2017-18’ to extend the scope of existing JSL rules to hold an online marketplace jointly and severally liable for:
- any future VAT that a UK business selling goods via the online marketplace fails to account for after HMRC has issued a notice to the online marketplace, ensuring that all sellers are in scope
- any VAT that a non-UK business selling goods via the online marketplace fails to account for, where the business was not registered for VAT in the UK and that online marketplace knew or should have known that that business should be registered for VAT in the UK
The government will also legislate in ‘Finance Bill 2017-18’ to require online marketplaces to ensure that VAT numbers displayed for third party sellers on their websites are valid. They will also be required to display a valid VAT number when they are provided with one by a third party seller operating on their platform. These requirements will be supported by a regulatory penalty.
The changes will have effect on and after Royal Assent of Finance Bill 2017-18.
4. Tax Administration
Simplifying late submission and late payment sanctions
As announced at Autumn Budget 2017, the government will publish a response to the recent consultation on proposals for late submission penalties and reform of sanctions for late payment. This was the most recent of a series of consultations on late payment and late submission sanctions.
The response document will be published on 1 December 2017. Alongside the summary of responses, a further consultation on harmonised interest and late payment sanctions will also be published. The government will be taking forward the points-based model for late submission sanctions through consultation on draft legislation in summer 2018. The government intends to legislate for this model in a future Finance Bill.
5. Making Tax Digital: changing the scope and pace
As announced at Autumn Statement 2015 and confirmed at subsequent fiscal events, the government legislated Making Tax Digital for Business (MTDfB) in Finance (No.2) Act 2017. This legislates to allow HMRC to require certain businesses, self-employed individuals and landlords to keep records digitally and update HMRC on a quarterly basis.
A tax information and impact note was published at Spring Budget 2017. In a Written Ministerial Statement on 13 July 2017, the government announced that only businesses with a turnover above the VAT threshold will be mandated to use MTDfB from April 2019, and then only to meet their VAT obligations. Businesses with a turnover below the VAT threshold will not be required to use MTDfB from April 2019 but can choose to do so. An updated statement of impacts will be published on 1 December 2017. The scope of MTDfB will not be widened before the system has been shown to work well and not before April 2020 at the earliest.