Marshall Smalley 2017 Budget Overview

Marshall Smalley 2017 Budget Overview
The Chancellor delivered what is supposed to be our last Spring Budget on 8 March 2017, it contains many measures affecting businesses and savers, particularly those who are self-employed who are affected by a reduction in the dividend allowance and increases in profit based national insurance charges.

This is our summary of these measures and previously announced changes too.

BUSINESS TAXES

Self Employed: from April 2018, the tax-free dividend allowance for shareholders reduces from £5,000 to £2,000, investors are less likely to be affected than the self employed as their shares can be held in ISAs.

From April 2018, Class 2 National Insurance Contributions (NICs), paid by the self-employed, will be abolished. But the main rate of Class 4 NICs increase from 9% to 10% with a further increase to 11% in April 2019.

Corporation Tax: As previously announced the main rate of corporation tax is cut to 19% from 2017 and 17% in 2020. Considering the above and with declining company profit taxes incorporation continues to look attractive.

Business Rate Rises: For businesses loosing small business relief their increase has been capped at £50 a month from April 2017 and Pubs with a rateable value of less than £100,000 get a one-year £1,000 discount. There is also a £300m hardship fund for those worst hit.

National insurance: no changes were announced to the NICs paid by the employed or employers.

Employment allowance: from 6 April 2017, some employers continue to be able to offset up to £3,000 each tax year against Class 1 NICs.

PERSONAL TAXES

Income tax: The personal allowance, the amount everybody can earn each year without paying income tax, will rise to £11,500 in 2017-18. By April 2020 it is planned to rise to £12,500.

No changes to income tax rates were announced.

The threshold for higher-rate tax will increase from £43,000 to £45,000 in April this year.

Capital Gains Tax:  The higher rate of capital gains tax on assets such as shares will be 20% and the basic rate is 10%. However, these new rates will not apply to chargeable gains on the sale of residential property.

Savings:  As previously announced the annual amount you can save into an Individual Savings Account (ISA) will rise from £15,240 to £20,000 from April 2017.

Also in April 2017 NS&I will offer a new three-year investment bond with a rate of 2.2%. This will be available to those aged over 16 and will be limited to £3,000. Applications will be open for 12 months.

 VAT

Registration and de-registration thresholds: whilst the VAT rates remain unchanged the registration threshold will increase to £85,000 and the de-registration threshold to £83,000; both changes apply from 1 April 2017.

If you would like more advice about how the Spring Budget 2017 will affect you or your business then please do get in touch with us and we can help.  You can contact us by phone on 0115 956 9452 or send us an email on This email address is being protected from spambots. You need JavaScript enabled to view it.
Personal Tax Planning 2016/2017 – Part 2