By Sue Leathem
JR Watson & Co
NOVEMBER’S Budget was a passive, static Budget. It might suggest a government that feels a bit pressured. The surprise to professional advisers was more what was missing than what was there.
The personal allowance and the band for tax at 20 per cent were both increased, taking more middle income people out of 40 per cent tax and helping lower earners. This was started under the last coalition government and the present government seems to have embraced this concept.
For those at the upper income levels, personal allowance is still withdrawn over a scale once income hits £100,000 pa and at £150,000 pa, income tax is at 45 per cent.
There are no changes to National Insurance paid by those working either in employment or self-employment. It was expected that the Budget would make a change to National Insurance on benefits-in-kind, so that employees as well as employers pay this. It was also anticipated that the rate paid by the self-employed would increase. Neither happened.
In April 2017, changes happened to the tax regime for people providing services through their own company to any organisation that receives public funding e.g. Government, the NHS, the BBC and so on. The new rules mean that these people are now taxed at source through PAYE, despite having no employment rights – no redundancy, sickness or holiday pay and no right to continuous engagement. This has been quite successful in tax collection. We did expect that there would be a proposal to extend this to the private sector in April 2019. In keeping with the low profile of the Budget, this idea is going out to consultation.
There was no need for significant anti-avoidance proposals. The legislation is there to deal with such matters as the Paradise Papers. If you are taxable in the UK, usually you have to pay tax on your total worldwide income. If you are not doing this, you now need to get your house in order.
Sue Leathem is a partner in J R Watson & Co and can be contacted on 01604 630745.
