New Tax & Business Measures come into effect.
As the 2017/18 tax year began yesterday, a range of new tax and business measures came into effect.
The introduction of the new Apprenticeship Levy is principal among these forming part of a government target to create three million new apprenticeships in England by 2020. The Levy requires employers with annual pay bills of over £3 million to invest a percentage of their yearly pay bill in apprenticeships.
Additionally, from 6 April individuals will be able to open up and save into a Lifetime ISA. This type of ISA is available to any adult under the age of 40, and can be used to deposit up to £4,000 per tax year. Consumers will receive a 25% government bonus on any savings put into the account before their 50th birthday. The tax-free savings and the bonus can be put towards a deposit for a first home in the UK worth up to £450,000 at any time, from 12 months after having first saved into the account.
Meanwhile, from April, the tax and employer advantages of certain salary sacrifice schemes will be removed. This means that employees swapping salary for benefits will pay the same tax as individuals who buy them out of their post-tax income. Some workplace benefits will be exempt from the changes: these include pension contributions and arrangements, childcare vouchers, workplace nurseries and ultra-low emission cars.
However, the British Chambers of Commerce (BCC) has warned that businesses may be ‘hit by upfront costs’ as the new tax year begins. Suren Thiru, Head of Economics at the BCC, commented: ‘We enter a new tax year with a raft of changes adding to the upfront cost of doing business. While corporation tax is decreasing, companies are more concerned about the escalating burden of input costs which hit firms before they even turn over a single pound.
‘Such costs are likely to cause many firms to implement cost reduction measures and weigh down on firms’ ability to invest, recruit and grow their business.’