The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald

The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald.
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.

Well, that made us sit up and pay attention!
After all the fuss about tax credits, the Chancellor George Osborne did what can only be described as a U-turn when he presented the Autumn Statement and Spending Review in Parliament.
His speech (the first Autumn Statement of this Parliament) and the supporting documentation presented to the House of Commons set out both tax and economic measures.
Here’s our summary of what happened . . .
In a nutshell, we saw -

• changes to the prospective Tax-Free Childcare scheme 
• reversal of most of the tax credit proposals 
• retaining the 3% diesel supplement for company cars which was to be abolished 
• the introduction of an apprenticeship levy 
• proposals to restrict tax relief for travel and subsistence expenses for workers engaged through employment intermediaries 
• the introduction of a payment on account of any capital gains tax due on the disposal of residential property 
• the introduction of higher rates of Stamp Duty Land Tax on purchases of additional residential properties. 

In the Budgets in March and July the government announced various proposals many of which have been subject to consultation with interested parties.
Some of these proposals are summarised here.
Draft legislation relating to many of these areas will be published next week on December 9 and some of the details may change as a result.
Our summary provides a reminder of other key developments which are to take place from April 2016.
The personal allowance:
For those born after 5 April 1938 the personal allowance is currently £10,600. Those born before 6 April 1938 have a slightly higher allowance. The Chancellor announced in the Summer Budget that the personal allowance will be increased to £11,000 for 2016/17 and to £11,200 in 2017/18.
The Government has an objective to raise the personal allowance to £12,500 by the end of this Parliament.
Not everyone has the benefit of the full personal allowance. There is a reduction in the personal allowance for those with 'adjusted net income' over £100,000 which is £1 for every £2 of income above £100,000. So for 2015/16 there is no personal allowance where adjusted net income exceeds £121,200.
Tax bands and rates:
The basic rate of tax is currently 20%. The band of income taxable at this rate is £31,785 so that the threshold at which the 40% band applies is £42,385 for those who are entitled to the full basic personal allowance.
The Chancellor has previously announced that the basic rate limit will be increased to £32,000 for 2016/17 and to £32,400 for 2017/18.
The higher rate threshold will therefore rise to £43,000 in 2016/17 and £43,600 in 2017/18 for those entitled to the full personal allowance.
The additional rate of tax of 45% remains payable on taxable income above £150,000.
Tax credits:
A number of changes to tax credits and Universal Credit were announced in the July Budget but the Chancellor has scrapped some of the changes following a defeat of the proposals by the House of Lords.
The Government has confirmed that:

• The rate at which a tax credit claimant's award is reduced as each pound of their income exceeds the income threshold (known as the taper rate) will remain at 41% of gross income from April 2016.
• The level of income at which a claimant's tax credit award begins to be tapered away (known as the income threshold), will remain at £6,420 per year from April 2016. Claimants earning below this amount will retain their maximum award. Consequently the income threshold for Child Tax Credit-only claimants will remain at £16,105 in 2016/17.

As announced at Summer Budget 2015, the income rise disregard in tax credits will reduce from £5,000 to £2,500. This is the amount by which a claimant's income can increase in-year compared to their previous year's income before their award is adjusted.
The changes to Universal Credit announced at Summer Budget will go ahead as planned from 2016/17.
Basically, there are two types of tax credits; Working Tax Credit (WTC) and Child Tax Credit (CTC). The CTC is potentially available to families who have responsibility for one or more child.
The Universal Credit is gradually being introduced. It is a new type of benefit replacing six existing benefits - income-based jobseeker's allowance, income-related employment and support allowance, income support, housing benefit, WTC and CTC.
We’ll have a look at some of the other measures, including employment and business taxes next week.

You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) -
http://www.clayshawbutler.com/news/latest-news-for-business
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