Spring Budget Summary
Yesterday, the Chancellor, Philip Hammond, delivered his first Spring Budget. He was quoted saying; “The Government was building the foundations of a “stronger, fairer, more global Britain” and today’s Budget provides a “strong, stable” platform for Brexit negotiations.”
We have put together the following key points:
National Living Wage
- Increase from £7.20 to £7.50 for those aged 25 and over from April 2017, what impact does this have on your company?
- Increased from £11,000 to £11,500 from April 2017
- The basic rate band to increase from 43,000 to £45,000
- National Insurance contributions will rise for the self-employed by 1% to 10% from April 2018, rising again to 11% in 2019
- Class 2 National Insurance, a separate flat rate contribution paid by self-employed workers making a profit of more than £5,965 a year, is to be scrapped as planned in April 2018
Tax Free Dividends
- Tax-free dividend allowance for directors/shareholders will drop from £5,000 to £2,000 from April 2018
- Dividend income paid on shares held in a stocks and shares ISA will remain tax free
Contact the Tax Team at Leonherman to discuss how these changes will affect you!
Corporation Tax will fall to 19% from April 2017 and 17% by April 2020.
The Chancellor also announced a reduction in the red tape surrounding the R&D tax regime.
Tax brings in £25bn a year; a trio of measures have been unveiled:
- Any growing business exiting small business rates relief will pay no more than £50 more a month in business rates
- Pubs with a rateable value lower than £100,000 which will receive a £1,000 annual discount
- £300m fund for local authorities to use for “discretionary relief” for business rates in “special hardship cases”
THE STATE OF THE ECONOMY
The Office for Budget Responsibility (OBR) has raised its economic growth forecasts for this year, expecting the UK economy to grow 2% rather than 1.4%
In 2018 growth is forecast to slow to 1.6%, then in subsequent years 1.7%, 1.9%, and back to 2% in 2021
Inflation is forecast to hit 2.4% this year, falling to 2.3% in 2018 and 2% in 2019
Unemployment is now at an 11-year low
Annual borrowing – OBR forecasts:
UK debt rose to 86.6% this year and is expected to peak at 88.8% next year but will fall to 79.8% in 2021-22
Public sector net borrowing forecast to fall from 3.8% of GDP last year to 2.6% this year, then 2.9%, 1.9%, 1% and 0.9% in subsequent years, reaching 0.7% in 2021-22
- Transport spending of £90m for the North; £23m for the Midlands
- £270m for new technologies
- £16m for 5G mobile technology
- £200m for local broadband networks
- New minimum excise duty on cigarettes based on a pack price of £7.35 introduced. No increases in alcohol or tobacco duties on top of those previously announced
- Vehicle excise duty rates for hauliers and the HGV Road User Levy frozen for another year
We are here to help you adapt and reassess your plans in light of legislative changes, please get in touch if you would like to discuss the impact of any points announced in this Budget.