Chancellor Philip Hammond delivered the last Spring Budget on 8 March which, given the continuing economic uncertainty of Brexit, did not contain a large number of either tax raising or giveaway proposals. Indeed the Budget has been described by some as ‘boring’, and it is true that official Red Book of budget measures contains only half the pages of its equivalent from a year ago!
Mr Hammond indicated that he wanted the tax system to be fair particularly in relation to the distinction between employed and self employed individuals. However many self employed individuals will not see his increase in their National Insurance contributions to be fair at all.
In another measure which could be seen as anti business, the dividend allowance introduced in April 2016 has been reduced, increasing the tax liabilities of entrepreneurs receiving income in this way.
Again the Budget did not provide any reprieve for landlords against the changes to tax relief for finance costs and these will now start to bite from April 2017 onwards.
Points to note:
- Increase in Class 4 National Insurance contributions to 10% from April 2018, and 11% from 2019. Class 2 National Insurance is though abolished in April 2018. Likely additional cost in the region of £250 for each year.
- Reduction in the dividend allowance from £5,000 to £2,000 from April 2018 affecting company owners, as well as portfolio investors.
- Confirmation that businesses and landlords will be required to provide HMRC digitally with quarterly information in relation to their income from April 2018; although where turnover is below the VAT threshold the changes are deferred until 2019.
- Personal Allowance confirmed at £11,500 for 2017/18, with higher rate tax threshold becoming £45,000
- Corporation Tax reduction confirmed to 19% from April 2007, reducing to 17% from April 2020
- ISA savings allowance limit increases to £20,000 from 2017/18