Key Points to the 2017 Budget
Philip Hammond delivered his first Budget as chancellor this week and there are a lot of eyebrow raising changes. So we’ve taken the key points and what it will mean to you…
Small business tax
- For businesses that fall below the VAT registration threshold, the introduction of quarterly reporting using the new digital system will be delayed by a year at a cost of £280m.
This has come threefold for England:
- The introduction of a cap so that rates rise by no more than £50 a month for small businesses; meaning they lose their rate relief.
- Pubs to get a £1,000 discount on business rates of less than £100,000 rateable value (90% of pubs).
- A £300m fund for discretionary relief for local authorities. This amounts to a £435m cut.
- £820m of tax avoidance measures.
- VAT on roaming telecoms outside the EU.
- New financial penalty for professionals who create schemes defeated by HMRC.
- Stop businesses converting capital losses into trading losses.
- The main rate of Class 4 National Insurance contributions for the self-employed to increase from 9% to 10% in April 2018 and 11% in April 2019
- The increases, applying to earnings between £8,060 and £43,000, will raise £145m a year by 2021-22 at an average cost of 60p a week to those affected. All Class 4 earnings above £43,000 will continue to be taxed at 2% while those below £8,060 will pay nothing.
- Taken together, millions of self-employed workers could pay an average of £240 a year more but ministers say those earning £16,250 or less will pay less
- No changes to National Insurance paid by the employed and employers or to income tax or VAT
- Class 2 National Insurance, a separate flat rate contribution paid by self-employed workers making a profit of more than £5,965 a year, is to be scrapped as planned in April 2018
Personal tax allowances
- As expected this has been increased to £11,500 for basic rate taxpayers and to £12,500 by 2020.
- Lesstax paid by self-employed people will cost the taxpayer £5bn this year.
- An investigation into tax treatment is being conducted by Matthew Taylor of RSA.
- Treasury to raise £145m from increasing national insurance contributions of some self-employed people.
Tax-free dividend allowance
- The Tax-free dividend allowance has been cut from £5,000 to £2,000 from April 2018.
National living wage
- Rises to £7.50 an hour in April but on its current trajectory it is unlikely to meet the target of £9 per hour by 2020
- The promisedNS&I three-year bond paying 2.2% will be available from April on savings up to £3,000.
- £300m for 1,000 new PhD placements.
- £270m for disruptive technologies such as robotics and driverless vehicles (the ‘industrial strategy challenge fund’).
- A £16m 5G tech hub.
- White paper to be published.
- Funding of £320m for 110 new free schools to take the total to 500.
- Free school transport extended to children receiving free school meals at selective schools.
- £216m invested in school maintenance.
- Introduction of T-levels – technical qualifications, an alternative to A-levels – for 16- to 19-year-olds.
- £40m for pilots on lifelong learning projects.
“Forecasts are always going to turn out to be incorrect but I think it’s certainly the case at the moment there’s more uncertainty, more risk than what we normally have so we shouldn’t be surprised if things turn out very, very different to what anyone thinks is going to happen. Let’s hope that’s because things turn out a lot better but of course it could be that things turn out worse, which gives the Chancellor some reasons for wanting to not spend some of the extra money that’s he’s managing to bank this year.
For a full Budget report visit here.