Budget Highlights for Umbrella Employees
Mar 20, 2017
If you are a contractor working through Umbrella Plus, our umbrella employment service, you are likely to be affected by the recent Budget announcement. In this article, we look at the most important changes and how they will affect umbrella workers.
Rates and Allowances
- Income tax
Changes have been made to Personal Allowance and Income Tax rates for 2017 / 2018 including a Scottish Income Tax rate. The changes are outlined in the table below.
The personal allowance is to increase to £11,500 in 2017/18, rising to £12,500 by 2020/21.
The higher rate tax threshold is to increase to £45,000 in 2017/18, rising to £50,000 by 2020/21.
- Marriage allowance
This applies from 6th April and allows for the transfer of £1,150 of a personal allowance to a spouse or partner.
- Savings Allowances
You should also be aware of new trading and property allowances which may be relevant to you. From 6th April 2017 new trading and property allowances of £1,000 each will be introduced for individuals with low levels of income from these sources. This will simplify the system for both taxpayers and HMRC if small amounts of income can legally be ignored, rather than requiring a tax return for a trivial liability.
Therefore, in 2017/18, a basic rate taxpayer will have 3 separate tax-free allowances of £1,000 for savings income (bank interest), rental income and self-employed income, and £2,000 for dividends.
What to do Next
If you would like further information on how the Budget affects you, please get in touch with a member of our Limited Company and Umbrella Plus contracting team on 01244 684700. You may also find it helpful to visit our Limited Company and Umbrella Plus information pages.