Spring Budget 2017: Key Points

Today, the Chancellor of the Exchequer, Philip Hammond announced the 2017 Spring Budget. We have taken the time to consider these announcements and have highlighted the key points below.

Businesses

• For businesses below the VAT registration threshold, the introduction of quarterly reporting has been delayed by a year, at a cost of £280m.
• There will be a cap on business rates which will mean that rates will raise by no more than £50 a month for small businesses losing their rate relief.
• Public houses with less than a £100,000 rateable value will receive a £1,000 discount on business rates.
• Local authorities will have access to a £300m fund for discretionary relief.

Tax avoidance

• VAT on roaming telecoms outside the EU.
• New financial penalty for professionals who create schemes defeated by HMRC.
• Measures will be introduced to prevent businesses converting capital losses into trading losses.

Self-employment

• An investigation into tax treatment is being conducted by Matthew Taylor of RSA.
• Treasury to raise £145m from increasing national insurance contributions of some self-employed people.
• 1% on Class 4 NIC from April 2018 to bring the charge to 10% and a further 1% from April 2019. The Chancellor has since scrapped this plan!

Tax-free dividend allowance

• Cut from £5,000 to £2,000 from April 2018.

‘National living wage’

• National living wage will rise to £7.50 an hour in April.

Personal tax allowances

• £11,500 from April.

Savings

• NS&I three-year bond paying 2.2% per annum available from April on savings of up to £3,000.
• ISA limit raised to £20,000.

Education and Training

• Allocated funds of £320m for 110 new free schools to take total to 500.
• Free school transport extended to children getting free school meals at selective schools.
• £216m invested in school maintenance.
• Introduction of T-levels – technical qualifications, alternative to A-levels – for 16-19-year-olds.
• £300m for 1,000 new PhD placements.
• £270m for disruptive technologies such as driverless vehicles.
• £16m for 5G technical hub.

Scotland, Wales, Northern Ireland

• £350m for Scottish government.
• £200m for Welsh government.
• £120m for Northern Ireland executive.

Social care and NHS

• £2bn over the next three years for England.
• £325m of capital for the first of the new sustainability and transformation plans (STPs), intended to improve healthcare.
• £100m for 100 onsite GP treatment centres in A&Es in England.

… and on International Women’s Day

• £20m fund to combat violence against girls.
• £5m to help people back into work after a career break.
• £5m for projects to celebrate the Representation of the People Act 1918.

Philip Hunt, Tax Consultant at Aston Shaw, commented: “The Chancellor seemed to revel in throwing jibes at the opposition in what was in reality, a very limited budget. Philip Hammond intends to stick rigidly to his fiscal policy but I think he was mindful of the looming departure from Europe. Brexit will undoubtedly give him an interesting time in the future, while he attempts to manage unknowns and unforeseeable circumstances for the economy.

He did, however, announce some changes to Class 4 National Insurance Contributions from April 2018 as a first step in trying to align the National Insurance yield from the Self Employed with the employed. I expect similar changes in the future too.

Likewise, the reduction in dividend allowance will further affect those taking dividends from their own companies as part of their income extraction. This will also affect those with what I believe to be, modest amounts of dividends from their portfolios, perhaps pensioners who may not have put their modest amount of investments into an ISA wrapper.”