The Chancellor of the Exchequer (the UK Finance Minister), released the UK government’s Autumn Statement setting out key economic policies that will be implemented over the next few years.
With the growth forecast and productivity downgraded, the main focus of the budget was on key domestic concerns: health, education and housing. Brexit continues to loom large but was dealt with quickly with more immediate issues taking centre stage.
There is some good news for employee share plans!
Measures introduced or confirmed in the budget:
Employee Sharesave or Save-As-You-Earn plans: employees on maternity and parental leave will be able to take up to a 12 month pause from saving into their Save-As-You-Earn employee share plans. This is an increase from the current 6 months. The change will take effect from 6 April 2018.
This has been as a result of lobbying by ProShare. This is a great step forward in recognising the financial pressures that new parents are under to decide to participate or to continue to participate in a plan. This is very good news.
Dividend allowance: as announced in the Spring budget, the tax-free dividend allowance will reduce from £5,000 to £2,000 with effect from 6 April 2018.
This allowance was only introduced in April 2016 and it is concerning that they have chosen to reduce the limit so quickly. UK employee tax notes may need updating.
Income tax: no changes to the rates. From April 2018, the personal allowance (the threshold at which individuals start to pay income tax) will increase from £11,500 to £11,850. The higher rate tax threshold will increase from £44,500 to £46,350.
Capital gains tax: the individual capital gains tax annual exempt amount (the level below which gains are tax free) will rise from £11,300 to £11,700 with effect from 6 April 2018.
Participants in UK tax-advantaged plans may benefit from increased potential tax relief if the conditions for capital gains tax treatment are met.
Electric vehicles: from 1 April 2018, there will be no benefit-in-kind charge on electricity that employers provide to charge employees’ electric vehicles.
Late Submission Penalties and Late Payment Interest: proposals to reform the penalty system for late or missing tax returns, adopting a new points-based approach. The government will also consult on whether to simplify and harmonise penalties and interest due on late payments and repayments.
Measures previously proposed but have been postponed or withdrawn:
Social security: the government will delay implementing a series of policy changes for national insurance contributions (NICs) until 2018. This includes the planned abolition of Class 2 NICs (paid by self-employed individuals) and reforms to the NICs treatment of termination payments.
Increase in Class 4 NICs: plans to increase the rate of Class 4 NICs paid by some self-employed individuals were abandoned shortly after being announced and have not been revived.
The Chancellor continues to focus on a commitment to tackle tax avoidance and has promised additional resources to the tax authorities to address this. Incentive arrangements which have been structured with tax planning in mind, should be kept under review to ensure that, if scrutinised, they can be shown to be compliant.
If you want to discuss any of the points above or want help with your UK plans, we are always happy to discuss your objectives and help you meet them in the best way, so please do contact us.
Chris and Sharon