08 Mar Spring Budget at a glance
Whilst Philip Hammond’s first (and last) Spring Budget delivers a rosy assessment of the British economy with unemployment at an eleven year low, it is overshadowed by the imminent triggering of Article 50 and big questions over the UK’s global economic future outside the EU.
In making sure we have enough “gas in the tank” for the Brexit journey, the Chancellor is raising taxes and investing more in infrastructure and technical training, to secure the funds, tools and skills he thinks the country will need.
Mr Hammond also recognises the need for greater productivity to improve the balance of payments, and to ensure enough funds are being channelled into social care for our ageing population.
But is he really helping small businesses who are facing increased business rates this year, digital quarterly reporting next year, and unfair changes in the VAT flat rate scheme and IR35? At least on the first of these issues, the Chancellor is softening the impact of business rate increases, though a root-and-branch reform of this archaic tax remains a distant dream.
Recap – key tax changes previously announced:
- Tax free personal allowance £11,500 from April 2017
- Higher rate threshold raised to £45,000 from April 2017
- Apprenticeship levy for large companies from April 2017
- Tax relief for landlord’s finance costs restricted from April 2017
- Certain non-UK dom individuals become UK doms from April 2017
- New IHT nil-rate band for residences from April 2017
- £1,000 tax free allowances for micro businesses from April 2017
- New Lifetime ISA for anyone under age 40 from April 2017
- ISA annual limit becomes £20,000 from April 2017
- Termination payments attract employers’ NIC from April 2018
- Corporation tax reduced from 20% to 17% by 2020
- Business rates devolved to local authorities by 2020
- Insurance Premium Tax increases to 12% from June 2017
Spring Budget 2017 key measures:
- Corporation tax reductions confirmed. Will be 17% by 2020
- Making Tax Digital delayed by one year for businesses with turnovers below the VAT registration threshold (£83,000)
- Reform of the business rates revaluation process promised
- Cap on business rates increases for those business leaving the Small Business Rates Relief scheme. Plus extra £300m fund for businesses hardest hit by rates rises.
- Anti-avoidance measures to be introduced
- Promise of further tax reforms for the self employed
- National Insurance Contributions for the self employed to be aligned with employees. That means a 1% increase in Class 4 NICs from April 2018 to 10% and then a further 1% in April 2019. Class 4 NICs were not included in the government’s tax lock. This has since been shelved until at least 2020.
- £5,000 Dividend Tax Allowance reduced to £2,000 from April 2018.
- National Living Wage to rise to £7.50 per hour from April 2017
- Personal tax allowance to rise to £12,500 as planned by 2020
- New green paper on protecting consumers.
- More infrastructure spending on technology to improve productivity
- New “T levels” to promote technical training to be on a par with “A levels”.
- Forthcoming schools white paper to introduce greater selection of pupils
- Free school transport for children who have free school meals
- Pilots for life-long learning to see what works best
- Social care grant funding of £3bn over the next three years to bridge the funding gap
- Green paper promised on future financing of social care that will not include a “death tax”
- £10bn extra funding for the NHS to 2020
- Salary sacrifice schemes scrapped from April 2017 except for ultralow emission cars, pensions, childcare and cycle schemes
- The charge for the Annual Tax on Enveloped Dwellings will rise in line with inflation for 2017/18
Finance Bill 2017
Whilst we have some information today on these announcements, the detailed provisions will be published on 20 March in Finance Bill 2017.
Source: Bishop Fleming