As increases in the personal allowance were a key part of George Osborne’s Budgets, Philip Hammond has followed suit with a further increase, while also announcing further action on tax avoidance – just weeks after the publication of the ‘Paradise Papers’.
In the Autumn Budget, Hammond announced changes affecting employees. There are to be increases in the National Living Wage and the National Minimum Wage, as well as rises on the personal tax allowance.
National Living Wage
From April 2018, the National Living Wage will rise from £7.50 an hour to £7.83, which equates to a 4.4% rise, or a pay rise of over £600 a year for a full-time worker. The government expects over 2m people will benefit from this rise.
National Minimum Wage
As with the rise of the National Living Wage, there have also been increases on the National Minimum Wage. For 21-24 year olds, this will rise to £7.38 per hour.
Personal tax allowance
The tax-free personal allowance, which is the amount you earn before you start paying tax, is also rising with inflation from £11,500 to £11,850. Hammond explained that this means a typical taxpayer will pay £1,075 less income tax in 2018-19 than they did in 2010-11. At the other end, the higher rate threshold will rise to £46,350 in April.
There is no change to the £85,000 VAT threshold for the next 2 years. Instead, Hammond launches a consultation into the threshold.
Hammond explains here: “But such a high threshold also has the benefit of keeping the majority of small businesses out of VAT altogether.
So I am not minded to reduce the threshold.
But I will consult on whether its design could better incentivise growth.
And in the meantime, we will maintain it at its current level of £85,000 for the next two years.”
Action on tax avoidance
Hammond also used the Autumn Budget to address new measures to crack down on tax avoidance, with the aim of bringing in an additional £160 from those who evade tax.
These measures include extending how far back in time the HM Revenue & Customs can assess non-compliance for offshore tax evaders and introducing ways of ensuring users of digital platforms pay their fair share of tax.
TBL Accountants are your local accountancy firm operating in Southend and across Essex. We specialise in a variety of services as personal, business, and charity accountants. Want to find out more? Get in touch with our team today.
Here for you.