Everything you need to know about the Budget 2017
The Chancellor of the Exchequer announced the Spring Budget 2017 today.
Key points from the Spring Budget 2017
- Personal Tax Free Allowance in 2017/18 will increase to £11,500 and the higher rate threshold increases to £45,000.
- Dividend allowance will be reduced from £5,000 to £2,000 from April 2018.
- IR35 in the public sector – agencies may if they wish take account of the contractor’s expenses.
- Payments in lieu of notice when employment is terminated will be taxable as earnings. Employer NIC’s will become payable on termination payments in excess of £30,000 on which Income tax is due.
- Non-UK domiciled individuals who have been UK residents for fifteen out of the last 20 years will be deemed as UK domiciled.
- Individuals with a UK domicile of origin but an acquired domicile of choice elsewhere will be deemed UK domiciled while they are UK resident.
- 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 travelled 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to save up to £4,000 each year and receive a generous bonus of up to £1,000 a year on these contributions, which can be withdrawn tax-free to put towards a first home or when they turn 60.
- NS&I Investment Bond announced at Autumn Statement 2016 will offer a market-leading rate of 2.2% over a term of 3 years and will be available for 12 months from April 2017. The Bond will open to everyone aged 16 and over, subject to a minimum limit of £100 and a maximum investment limit of £3,000.
- Existing ISA allowances are to increase to £20,000 from April 2017.
- Pension’s money purchase annual allowance will reduce to £4000 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 to reduce the gap in rates paid by the self-employed and employees, and to reflect the introduction of the new State Pension to which the self-employed have the same access.
Important Announcement (15th March 2017): Chancellor Philip Hammond announces that the government will not proceed with the National Insurance increases above which were critisised for breaking the 2015 manifesto plege.
Property and Trading Income
- A £1,000 business rate discount 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.
- Annual Tax on Enveloped Dwellings (ATED) charges rise for properties valued over £1 million.
- Trading Income Allowance of £1,000 has been introduced from April 2017. Those individuals with property or trading income of £1,000 or less will not need to declare or pay 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 levy rate for added sugar drinks with a total sugar content of 5 grams or more per 100 millilitres will be set at set at 18 pence per litre, and those with 8 grams or more per 100 millilitres will be set at 24 pence per litre.
- Vehicle Excise Duty (VED) – From 1 April 2017, VED rates for cars, vans and motorcycles registered before April 2017 will increase by Retail Prices Index (RPI)
- Insurance Premium Tax increases by 2% from June 2017.
- From 6th April 2017, the Fuel Benefit Charge multiplier for both cars and vans will increase by RPI.
As ever, the Spring Budget contains many legislative and regulatory changes which will impact you. We are sure, once you have had time to digest this information you will have some questions. If you would like to discuss anything in more detail, we will be happy to assist and advise you further. Please do not hesitate to contact your accountant.
To read the full report of the Budget 2017 please click here.