Chancellor Philip Hammond’s first, and last, Spring Budget was delivered at a pivotal moment for the UK as it readies itself to begin the process of leaving the EU. The Chancellor will announce a second Budget in the autumn as the Treasury changes to the new financial cycle from 2018.
However, his first offering of 2017 contained several significant measures:
- A reduction in the dividend allowance from the current £5,000 to £2,000 from 2018/19.
- A 1% increase in the main Class 4 NIC rate to 10% for 2018/19 and a further 1% addition to 11% for 2019/20. *This proposal has since been abandoned prior to implementation*
- A one year deferral in the start date for Making Tax Digital (MTD) for unincorporated businesses and landlords whose turnover is below the VAT threshold (£85,000 from 1 April 2017).
- An increase in the personal allowance for 2017/18 to £11,500 and a corresponding rise in the higher rate threshold to £45,000, although in Scotland the latter figure will only apply to savings and dividend income.
- A new 25% tax charge on transfers to qualifying recognised overseas pension schemes (QROPS), other than for those who have ‘a genuine need’ to transfer.
- Three measures to help small businesses cope with the changes to business rates, due to take effect in April 2017. The first being that no business losing small business rate relief will see their bill increase next year by more than £50 a month, and the subsequent increases will be capped at either the transitional relief cap or £50 a month, whichever is higher.
- The publication later in the year of a green paper examining the funding of social care, although the Chancellor ruled out the rumoured ‘death tax’. In the interim an additional £1bn is to be made available for social care funding in 2017/18.
If you have any questions about the above summary or how any aspects of your tax and financial planning may be affected by the Budget, please get in touch with your financial adviser to discuss them.
Please remember, no news or research item is a recommendation or advice to buy. LEBC Group Ltd is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest.
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