Spring Budget 2017 – Key Points

budgetPhilip Hammond has now delivered what is to be the last ever Spring Budget. See below for a summary of the key announcements.

Read our full Budget summary

 

From April 2017: new announcements

  • Package of measures to give some relief to those small businesses particularly badly affected by business rates revaluation.
  • The threshold for simplified ‘cash basis’ accounting for self-employed businesses raised from VAT registration threshold to £150,000 for 2017/18, and extended to landlords.

From April 2017: previously announced

  • Income Tax rates and allowances confirmed as announced at Budget 2016: tax-free personal allowance will be £11,500, the threshold for 40% tax will be £45,000.
  • National Insurance thresholds for employers and employees made consistent at £157 per week.
  • Tax and National Insurance advantages of ‘salary sacrifice’ schemes withdrawn, apart from arrangements involving pensions, childcare, Cycle to Work and ultra-low emission cars.
  • New £1,000 tax-free allowances for trading and property income apply for 2017/18 tax year.
  • New tax-free childcare arrangements to be introduced on a trial basis and rolled out to all taxpayers over the coming year.
  • Tax advantages of foreign-domiciled status will be lost for those residents in the UK for 15 of the last 20 years, and UK property held by a foreign-domiciled individual through offshore structures becomes chargeable to Inheritance Tax.
  • ISA investment limit rises from £15,240 to £20,000 per year, of which £4,000 can be in the new ‘Lifetime ISA’.
  • Public sector employers become responsible for tax due from individuals working for them through personal service companies and similar arrangements where there is an underlying employment relationship.
  • Limit on pension contributions for those who have already made a flexible income drawdown from a money purchase pension scheme will fall from £10,000 per year to £4,000 per year. Limit for those who have not made such a drawdown remains £40,000.
  • The main rate of Corporation Tax falls to 19% from 1 April 2017.
  • The benefit of VAT Flat Rate Scheme almost completely withdrawn for businesses spending less than 2% of their turnover or less than £1,000 per year on goods, excluding capital goods, food, vehicles and fuel.
  • Reforms to restrict interest relief and amend the rules for brought forward losses for corporation tax.
  • From 1 June 2017, Insurance Premium Tax rises from 10% to 12%.

April 2018: new announcements

  • ‘Making Tax Digital’ reforms require businesses and landlords with turnover above the VAT registration threshold (£85,000 for 2017/18) to make quarterly online reports updating their tax position; businesses below the threshold will not be affected until April 2019 (when turnover threshold will be £10,000).
  • Class 4 National Insurance Contributions rate on profits between lower threshold and upper limit (for 2017/18: £8,164 to £45,000) rises from 9% to 10% (and from 10% to 11% in April 2019).
  • Nil rate band for dividend income, introduced at £5,000 for tax year 2016/17, reduced to £2,000 for 2018/19.

April 2018: previously announced

  • Class 2 National Insurance Contributions for self-employed abolished.

If you have any queries about how any of the above may impact you or your business please get in touch with a member of our Tax Team on 01903 234094.

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