How the Finance Act 2017 will affect ICAS course notes

Photo of a boardroom
By Chris Cunnane, Tax, Law and Financial Accounting tutor

10 April 2017

The Chancellor recently gave his 2017 Budget Statement to Parliament, announcing several changes to the tax system for the coming years.

These changes will be brought into law as part of the Finance Act 2017 and many of them will be incorporated into the ICAS course notes for TC classes beginning from August 2017 and for TPS, TPE and ITP classes in 2018.

At 726 pages Finance Bill 2017 is the longest Finance Bill ever published. Here is our summary of some of the key points, divided into changes that will potentially affect your future studies at TPS, TPE or ITP if you will be studying in 2018:

Changes that will affect future ICAS course notes:

Personal tax

  • The tax-free personal allowance will be increased to £11,500 in April 2017 (currently £11,000). The allowance will reach £12,500 by 2020.  
  • The threshold above which people will pay higher rate tax will rise in April 2017 to £45,000 (currently £43,000). The higher rate threshold for Scottish Income Tax will stay at £43,000 (applicable to non-savings income only).
  • Class 1 Secondary NIC higher rate threshold is to increase to £45,000 (currently £43,000) – a measure which has slipped in unannounced.
  • Self-employed taxpayers will no longer pay Class 2 NIC from April 2018 (currently £2.80 per contribution week).
  • Two new annual tax allowances for individuals of £1,000 each, one for trading income and one for property income will be introduced in April 2017. Individuals will no longer have to declare or pay tax on income below this allowance.

Dividends and savings

  • The dividend allowance will reduce from £5,000 to £2,000 from April 2018.
  • The Lifetime ISA will allow younger adults to save up to £4,000 each year and receive a bonus of up to £1,000 a year on these contributions. Funds can be withdrawn tax-free to put towards a first home or saved until a person turns 60.

Corporation tax and VAT

  • The headline rate of corporation tax will be cut to 19% in April 2017 and will drop to 17% in 2020.
  • There have been several changes to corporation tax reliefs:
    • Substantial Shareholding Exemption (SSE): For disposals on or after 1 April 2017, the condition that the company making the disposal must be a trading company or member of a trading group has been withdrawn.
    • Loss relief: From 1 April 2017, there will be a new restriction on the amount of profit that can be offset by carried-forward losses.  
    • There will be greater flexibility over the types of profit that can be relieved by carried forward losses. Most trading losses and non-trade deficits on loan relationships can now be set against total profits.
    • Carried-forward losses can also be surrendered as group and consortium relief.
  • The VAT registration threshold will increase from £83,000 to £85,000 from 1 April 2017. The de-registration threshold will increase from £81,000 to £83,000.
  • The VAT use and enjoyment provision for mobile phone services provided to consumers will be removed, bringing services used outside the EU within the scope of the tax.

Topics

  • CA Student blog

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