Described as a budget that “takes forward our plan to prepare Britain for a brighter future”, announced Chancellor Philip Hammond.
This is our summary of the key announcements made during the Spring Budget 2017.
For Individuals – see here for more information
• Personal allowance increasing to £11,500 from April 2017. The higher rate threshold will rise to £45,000 (from £43,000 currently).
• Even though Class 2 NICs are being abolished from April 2018, Class 4 NIC remains. It was announced that the Class 4 rate it was increasing by 1% to 10% for self-employed individuals from April 2018, but this was subsequently retracted and will now remain at 9%.
• The £5,000 tax-free dividend allowance introduced last year, will be reduced to £2,000 from April 2018. Thereafter dividends will continue to be taxed at 7.5% for basic rate, 32.5% for higher rate and 38.1% for additional rate taxpayers.
• The new Lifetime ISA is available for adults age 18 to 40 from April 2017, allowing for savings of up to £4,000 per annum up to age 50. The Government will top up by 25% bonus each year.
• A new NS&I Bond will be available offering 2.2% interest over 3 years on deposits of between £100 and £3,000.
• From September 2017, working parents with 3 and 4 year old children will have their tax-free childcare allowance doubled to 30 hours a week.
What to remember from the last Budget
• From April 2017 there is a tax-free £1,000 allowance for trading and property income for a small earner receiving less than this.
For Business – see here for more information
• Corporation tax rate continuing to reduce to 17% by 2020. No change to the current proposed reduction to 19% from April 2017.
• Making tax digital (MTD) reporting requirements have been delayed for some businesses. Whereas previously all unincorporated businesses and landlords had to comply from April 2018 regardless of size but this Budget delayed it by 12 months for those below the VAT registration threshold.
• From April 2017, the cash basis threshold for unincorporated businesses to increase from £83,000 to £150,000.
• Flat rate VAT
changes introduced from 1 April 2017, all ‘limited cost’ traders flat rate percentage will change to 16.5%. Limited cost traders are businesses which spend less than 2% of their VAT inclusive turnover on goods. For this purpose goods exclude capital expenditure (equipment) and food and drink.
• VAT registration threshold increasing to £85,000.
Potential Planning & Simple Tax Tips
Thinking of selling any shares soon, do so before the tax year end to use up your CGT free annual exemption.
Why not transfer some shares to your spouse to make use of their tax free capital gains tax annual exemption also, (if they haven’t already used this in the current tax year).
Why not transfer any income bearing assets, such as interest earning bank accounts or let properties to your spouse if they are paying at a lower rate of tax than you.
If you are currently a 40% or 45% taxpayer but may not be in future years, you may wish to look at ways of deferring work and income into the new year or consider some pension contributions before
If you are earning in the region of £100,000, you could suffer 60% tax by losing your personal allowance so consider ways of reducing your taxable income such as with pension contributions, taking less dividends, or accelerating business expenses for example.
You may want to consider bringing your partner into your business or perhaps employing your teenage children to help out in the family business.
Make sure whoever is the higher rate taxpayer makes any Charitable Gift Aid donations so as to benefit from the higher rate tax relief.
Make sure to use your tax-free ISA allowance if you are paying tax on savings (make use of your childrens’ too).
Consider if you want to make any EIS/SEIS or VCT investments before the end of the tax year.
Consider deferring income into the next year to preserve some child benefit.
Make sure you have taken a salary from your company, if appropriate to do so, particularly if you have no other income.
Make sure you have taken sufficient dividends in the year to utilise your basic rate band before the tax year end.