The Spring Budget 2017 delivered the expected attacks on the self employed and company business owners who give the economy so much of it’s competitiveness and flexibilty which were reflected in the positive forecasts presented by the Chancellor Philip Hammond.  After the usual positive forecasts backed up by the Office for Budgetary Responsibility, a snapshot of which follows (credit to HM Treasury)

2017 Budget snapshot

he stated “I am listening to the voice of business” and in two areas it appears this was the case:

  • There will be a delay of 1 year in the introduction of quarterly reporting for landlords and the self employed (Making Tax Digital) with turnover below the VAT limit (£83k 2016/17) from the proposed April 2018 to April 2019
  • For businesses coming out of the small business rate scheme, there are 3 additional benefits
    • An additional cap of £50pm increase for the first year then a further £50pm for the second year
    • For smaller pubs, making up 90% of those affected by the measure, a £1k pa discount
    • A local discretionary relief for local authorities to offer to specific taxpayers funded by £300m from central government

There will be continued pressure to attack tax avoidance and maintain the UK position of one of the lowest tax gaps worldwide.  While acknowledging that the “self employed and those working through companies should always be able to exercise choice” there will be a report this summer on how to make it fairer across the economy between the employed and self employed how much tax they pay.  Two measures being introduced continue to increase the costs of working for yourself and the Chancellor’s misheld belief that all incorporation are tax led:

  • Tax free dividend allowance is being reduced from £5k to £2k from April 2018 – one of the commentators did point out that this had perhaps been set too high in the first place.  This will cost a basic rate taxpayer an additional £225pa and higher rate £975pa.  This will of course not only affect business owners but investors with share portfolios, however he did state that there was some relief for individuals with increasing ISA allowances
  • For the self employed Class 2 NIC (the old weekly stamp) is being abolished from April 2018, but will be replaced by an increase in Class 4 NIC (payable on profits over ~£8k) by 1% from that date and a further 1% from 2019 – UPDATE – this decision has been reversed by the Chancellor on 15 March 2017 as it was against an election promise 

There was little news in the headline areas:

  • Road tax for hauliers and the HGV Road user levy is frozen
  • There are no changes to the car road tax rates and changes announced which start at the end of the month
  • The tax free personal allowance goes up next tax year to £11.5k with a £43k higher rate threshold, increasing to £12.5k and £50k by the end of this Parliament
  • Corporation tax will reduces to 19% from 1 April 2018 and to 17% by 1 April 2020
  • There were no comments on alcohol, but cigarette duty will increase to at least £7.35/pack
  • Further £270m on offer for disruptive technologies like robotics, driverless cars and biotech where the UK is a world leader

There was very little new announced in the Budget and the government will be waiting to see what progress there is over the next few months after Article 50 is invoked.  The regular autumn Budget may be a more interesting affair.  As with all Statements and Budgets there will be more issued in Press releases but outside of the usual political gesturing, very little news.  You should seek professional advice before taking any steps based on these contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”