Autumn Statement 2015: tax rates and allowances for 2016/17
George Osborne today confirmed the income tax allowance for 2016/17 will rise to £11,000, equivalent to £212 a week of tax-free earnings for all but the highest paid.
The Treasury estimates this will lead to 29 million people being better off, including 570,000 who will see their income tax bill disappear completely. A basic-rate taxpayer will pay £905 less in 2016/17 than in 2010 as a result of the increased personal allowances.
Legislation has also been created to ensure those on the minimum wage will not pay income tax on earnings up to 30 hours a week in future.
The 40% higher rate tax threshold is also rising by £615 to £43,000 in April 2016. The higher-rate threshold is forecast to rise to £50,000 by 2020.
Scottish taxpayers may see their income tax rates change in April 2016, when the Scottish parliament is due to take control of its income tax. The UK government has announced intentions to allow the Welsh Assembly to set its own income tax rates without referendum, though an implementation date has not been set.
Salary sacrifice schemes at risk
Though no changes to salary sacrifice schemes have been announced, “the government remains concerned about the growth of salary sacrifice arrangements and is considering what action, if any, is necessary”, according to documents released today by the Treasury.
A tax-efficient way of receiving staff benefits, where an employee agrees to forego a proportion of their salary for an equivalent contribution into their pension scheme or in exchange for company car, gym membership, childcare vouchers or private medical insurance. A salary sacrifice scheme is a matter of employment law, not tax law, and is often entered by an employee who is about to move into the higher 40% tax bracket.