March 2017 Budget
The Chancellor of the Exchequer, Philip Hammond delivered his first Budget to Parliament on Wednesday 8 March.
He declared that this will be the last Spring Budget and that all future Budgets will be in the Autumn. Therefore, we can expect a further Budget in 2017.
On the wider UK economic outlook he referred to the OBR forecast that there will be 2% growth in 2017, inflation will be 2.4% and that borrowing will be £52 billion this year.
He stated that the UK economic growth in 2016 was second only to Germany.
The main points of tax interest from the Budget Speech are as follows:
Increases in the tax free personal allowance are confirmed at:
2017/18 – £11,500
The band at which taxpayers start to pay tax at 40% will be £45,000 in 2017/18 (inclusive of personal allowance). For Scottish Taxpayers the band remains at £43,000.
The Dividend Tax Allowance (currently £5,000) will be reduced to £2,000 from April 2018. This will result in additional tax liabilities for taxpayers whose dividend income exceeds this level.
The main rate of National Insurance on Class 4 contributions will increase from 9% to 10% in April 2018. A further 1% increase will occur in April 2019. This will bring the Self-Employed NIC rate closer to the rate paid by employees (currently 12%).
In April 2018 Class 2 National Insurance contributions will be abolished and it is calculated that sole traders or partners with profits not exceeding £16,250 will be no worse off after the increase to Class 4 rates.
The compulsory registration threshold increases from £83,000 to £85,000 on 1 April 2017. The deregistration threshold will be raised to £83,000.
Making Tax Digital
The implementation date for unincorporated businesses and the self- employed to begin reporting their income and expenses to HM Revenue and Customs on a quarterly basis has been delayed 12 months to April 2019 where their turnover is below the VAT threshold. For those trading above the VAT threshold, the implementation date remains at April 2018. Landlords with income greater than £10,000 will still be required to file quarterly from April 2018. Any business or self-employed individual with turnover below £10,000 is exempt from the requirement to file quarterly.
The annual ISA allowance will increase to £20,000 from April.
The new Lifetime ISA is available from April 2017.
On Business Rates no business losing small business rate relief will see their bill increase next year by more than £50 a month.
Next month will see the introduction of the Government’s flagship Tax-Free Childcare policy which will allow working families to receive up to £2,000 a year towards the cost of childcare for each child under 12.