Spring Budget 2017
Phillip Hammond delivered his first Budget as chancellor today and there were certainly plenty of headlines.
As a leading accountant, we’re here to guide you through any legislative changes that may affect small businesses in the UK.
We’ve summarised the key points below. You can also download our full guide on the Budget 2017 here.
Important update: On the 15th March 2017, Chancellor Philip Hammond announced that the government will not proceed with the planned increases to National Insurance (NI) rates for the self-employed.
The key points from the Budget 2017 were:
- Personal Tax Free Allowance will increase to £11,500. The higher rate threshold will increase to £45,000 in 2017/18.
- Dividend allowance will be reduced from £5,000 to £2,000 from April 2018.
- Corporation Tax rate will be cut from 20% to 19% from April 2017 and then to 17% by April 2020.
- VAT registration thresholds will increase from £83,000 to £85,000 and deregistration threshold from £81,000 to £83,000 from 1 April 2017.
- Company Car tax bands for electric cars will refer to miles traveled as well as CO2 emissions.
Pension and Savings
- A Lifetime ISA will be introduced from 6th April 2017. This allows younger adults to save up to £4,000 each year and receive a generous bonus of up to £1,000 a year on these contributions, which can be withdrawn tax-free to put towards a first home or when they turn 60.
- Existing ISA allowances are to increase to £20,000 from April 2017 .
- Pension’s money purchase annual allowance will reduce to £4,000 restricting the amount you can contribute to a pension if you have flexibly accessed pension savings.
- Class 2 National Insurance for the self-employed will be removed from April 2018.
Class 4 National Insurance contributions for the self-employed will increase from 9% to 10% in April 2018 and to 11% in April 2019.(Note: this plan was removed from the budget on the 15th March 2017)
Property and Trading Income
- A £1,000 business rate discount will be introduced for public houses with a rateable value of up to £100,000, subject to state aid limits for businesses with multiple properties, for one year from 1 April 2017.
- Increases in bills for Small businesses losing Small Business Rate Relief will be limited to the greater of £600 or the real terms transitional relief cap for small businesses each year.
- Trading Income Allowance of £1,000 has been introduced from April 2017. Those individuals with a property or trading income of £1,000 or less will not need to declare tax on this income. Those above £1,000 allowance can deduct it from their income instead of deducting actual expenses.
- Fuel duty has been frozen.
- Alcohol duty on beer, cider, wine and spirits – from 13 March 2017 will increase in line with inflation including higher strength cider.
- Tobacco duty will increase by 2% above the retail price index (RPI). This change will come into effect from 6pm on 8 March 2017.
- Minimum Excise Tax for cigarettes will be set at £268.63 per 1,000 cigarettes. It will take effect from 20 May 2017
- The government will provide an extra year, until April 2019, before Making Tax Digital is mandated for unincorporated businesses and landlords with turnover below the VAT threshold.
No comments yet