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Our at-a-glance Budget 2017 summary
08 March 2017
Here are the highlights from Chancellor Philip Hammond’s first Budget (and last Spring Budget!)
The main rate of Class 4 national insurance contributions (NICs) will rise by 1% to 10% from April next year (2018). That will then rise again to 11% in 2019. The Chancellor says this will raise £145m a year by 2021-22, at an average cost of 60p a week for those affected.
Note: Class 4 NICs at 9% are paid on profits between £8,060 and £43,000. Class 2 NICs are paid on profits of £5,965 or more (these are set to be abolished).
There will be a reduction in the tax-free dividend allowance for directors/shareholders from £5,000 to £2,000, with effect from April 2018.
The government is introducing UK VAT on roaming telecoms services. It is also planning to tackle abuse of foreign pension schemes and take action to stop businesses converting capital losses into trading losses. From July, there will be new penalties for professionals who enable a tax avoidance arrangement that is later defeated by HMRC.
Chancellor also re-committed to raising the threshold at which workers pay income tax to £12,500 a year by 2020. He also pledged that by 2020 the 40% tax rate will not kick in until £50,000 has been earned. He pointed to the fact that by 2020 corporation tax will fall to 17%, ensuring “Britain is open for business”.
Making Tax Digital
Unincorporated businesses (businesses owned privately by one or more people) that have an annual turnover below the VAT registration threshold will have until April 2019 to prepare before MTD becomes mandatory.
Business rates bring in £25bn a year, so the Chancellor says he can’t abolish this tax! He did, however announce three new measures:
- No business losing small business rate relief will see their bill increase next year by more than £50 a month.
- Some 90% of local pubs will have a £1,000 discount on their business rates bill.
- A £300m fund for local councils to offer discretionary relief for hard-hit businesses.
Hammond also revealed that new ‘T-Levels’ will be introduced, replacing some 13,000 qualifications with just 15 career-focused routes (such as construction, digital and agriculture). The number of hours training for 16-19 year old technical students will increase by over 50%. The new qualifications will include a high-quality three-month work placement for every student.
The government will also provide maintenance loans for those entering part-time degrees, and doctoral loans of up to £25,000 to support higher-level study.
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