The publication of the Finance Bill in the spring/summer of this year will presage a change in Parliamentary proceedings. A second Budget in autumn 2017 followed by a Spring Statement in 2018 marks the start of a process enabling Parliament to scrutinise tax changes well before the tax year where most will take effect.
As if the domestic ‘flip-flopping’ of a long-standing timetable wasn’t enough, the Chancellor, Philip Hammond, delivered his first Budget speech against a backdrop of Brexit uncertainty.
Before he stood up, punters could have obtained long odds about witnessing a wise-cracking ‘Spreadsheet Phil’, as he has become known, standing at the despatch box (the joke-o-meter registered seven during his hour-long address). But beyond the laughs from the government benches combined with Opposition scowls, the Chancellor sent out some fairly serious messages.
For starters, as part of a fiscally-tight Budget there was the Chancellor’s decision to target the self-employed, company owners and investors in a bid to raise billions of pounds and provide a “strong and stable platform” for the UK’s negotiations as it navigates a path away from the EU. He also proposed to enhance the fairness in the UK’s tax system with a view to transforming the economy into one that works for everyone.
With ISA allowances set to be worth £20,000 from April 2017 and a reduction from £5,000 to £2,000 in the tax-free dividend allowance from April 2018, here are two opportunities offering professional advisers the chance to demonstrate their expertise admirably to clients.
Throw in the need for businesses to seek out rates advice on their premises following the impending changes to the system, combined with the relief measures announced by the Chancellor, and the Spring Budget could prove a Spring-board to the forging of robust relationships between advisers and clients. And that’s before the Chancellor even deigns to delve back into his joke book to help buff up his Autumn Budget announcements…
Spring Budget 2017
The Chancellor of the Exchequer, Philip Hammond, delivered his first Budget against a backdrop of a more-buoyant-than-expected UK economy post-Brexit and improved tax receipts. Set against these were concerns about funding the NHS and social care, and the impact on business from changes to business rates.
Here are some of the key tax and related announcements in the Budget:
- Self-employed workers will see their Class 4 national insurance contributions (NICs) increase by 1% to 10% in April 2018, with a further percentage point rise to 11% from April 2019. The government had previously announced that Class 2 NICs will be abolished from April 2018.
- The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018.
- The individual savings account (ISA) allowance will rise to £20,000 in April 2017 as previously announced.
- The new NS&I investment bond available for 12 months from April 2017 will pay 2.2% over a three-year term on deposits of up to £3,000.
- As already announced, the personal allowance will rise to £11,500 in April 2017 and to £12,500 by 2020 and the higher rate income threshold will rise to £45,000. Special rules will apply in Scotland.
- The Chancellor confirmed that corporation tax will be cut to a rate of 19% from April 2017 and that the rate will be further reduced to 17% in 2020.Businesses losing their Small Business Rate Relief will benefit from a cap on increases in their rates bill.
- The government has announced it will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings.
- Unincorporated businesses and landlords with a turnover below the VAT threshold will have an extra year, until April 2019, before they have to implement ‘Making Tax Digital’.
- The government will introduce a 25% charge on transfers to qualifying recognised overseas pension schemes or QROPS. There will exemptions from the charge for people with a genuine need to transfer their pensions overseas.
The Chancellor’s Budget speech contained many references to ‘fairness’. The decision to raise NICs for the self-employed was widely trailed but the cut in the dividend allowance came as a surprise.
Follow the link for more details on our round up of the Spring 2017 budget – Antrams Spring 2017 Budget Summary