With the beginning a the new tax year (today), comes several big reforms that you should know about.
Many of the measures previously announced by the Cameron-Osborne administration will be put into action tomorrow.
The Apprenticeship Levy has received much attention in the press and is extremely exciting for students and the education sector. The levy has been introduced to promote UK employers funding apprenticeships.
Employers will be able to access digital vouchers which can be spent on approved training courses for apprentices. Each company with a pay bill of £3million of more will have to pay the apprenticeship levy rate of 0.5%. Employers will receive an allowance of £15,000 to offset against their levy payment.
Immigration skills charge
Another levy introduced on companies. Employers will face a £1000 charge each year for each employee who is a non-EU skilled migrant with a tier-2 working visa. A lower rate has been introduces for small companies and charities.
Buy-to-let tax relief
Landlords will face more restrictions on mortgage relief interest. Over the next four years, a higher-rate tax relief on mortgage interest will be introduced. This will cut mortgage interest tax relief to a maximum of 20%. This is likely to massively affect the profits of buy-to-let landlords.
A new type of ISA-a ‘Lifetime ISA’- is being introduced which is designed to help people save for a house or for retirement. With the attraction of a 25% top-up from the government on savings anyone aged between 18 and 39 can save up to £4,000 a year to gain a bonus of a maximum of £1,000 a year.
Higher ISA limits
The limit on the amount you can save into a tax-friendly ISA is rising from £15,240 in 2016-17 to £20,000 for the 2017-18 tax year.
Gender pay gap reporting rules
Employers of more than 250 staff will be subject to new regulations that require the differences in pay between men and women to be stated on their websites and a central government site to allow employees and potential recruits to see the gender pay gap of each employer.
Tax credits and universal credit limits to two children
Babies born into families that already have two children will no longer receive any additional support through tax credits or their successors, universal credit.
Non-dom status replaced by long-dom
Expats living in the UK who are domiciled overseas for tax purposes are to face many tax changes. As of today, non-doms will be regarded as UK-domiciled for tax purposes if they have lived in the UK for 15 years or more of the past 20 years.
Personal Allowance and higher-rate threshold rising
The amount of income that can be earned before facing income tax has risen from £11,000 to £11,500. The high-rate tax threshold will also rise from £43,000 to £45,000.