On 8th March 2017, Philip Hammond, the Chancellor of Exchequer delivered his first and last Spring Budget (as from next year the Government will only delivery one Budget per year and it will delivered in the autumn season).
The Spring Budget was very short in comparison with previous ones with only 28 main announcements. Philip Hammond ripped up a Conservative manifesto (delivered by David Cameron in 2015) which promised not to increase taxes such as national insurance, income tax and VAT for the next 5 years and hit 2.5million self-employed with an increase in National Insurance Contribution (NIC 4) from 9% to 11% in the next two years (even though the fixed national insurance contribution class 2 will be scrapped). However, on 15/03/2017 Mr Philip Hammond has scrapped the proposed increased in National Insurance Contribution Class 4 for all self-employed individuals.
The Chancellor also hit small business owners and cut dividend tax allowance from £5,000 to £2,000 – the amount of dividends they can distribute without paying tax. Most of these tax receipts will be used to help adult social care.
Mr Chancellor said “As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future” and “We are building the foundations of a stronger, fairer, more global Britain.”.
After reading the Budget a couple of times, I realized that there was nothing about Brexit in the Budget and how it could affect the Economy. It was not described either what would be the impact of UK leaving the European Single Market. Actually, the words: Europe or European were mentioned a couple of times in the Budget.
Follow below 23 budget announcements I would like to share with you:
- Growth forecast: The Office for Budget responsibility expects the economy to grow 2% this year, up from 1.4% forecast;
- Public Borrowing: Public sector net borrowing set to total £51.7bn in 2016-2017, down from £68.2bn previously forecast;
- Dividends tax allowance cut: The tax-free allowance on dividends for company director and private shareholder is to be cut from £5,000 to £2,000 from April 2018;
- Self-employed NIC increase: Self-employed NIC4 to increase to 11% by 2019 on profits above £ 8,060; Reversed later on a Commons statement.
- Business rates: Pubs with rateable values of less than £100,000 to receive a £1,000 rebate on business rates;
- £2 billion boost for adult: An additional £2bn for adult social care in England over the next three years;
- Funding for free schools and travel costs: Funding for 100 new free schools, including specialist maths school, an extension of travel support for poorer children at selective school and vocational qualifications to be called “T level”;
- 25% tax on overseas pensions transfers: People looking to move a British pension offshore to a qualifying recognised overseas scheme face a 25% tax charge;
- Brexit migration targets will not be met;
- Tax Credits: Families will only be allowed to claim child tax credits for their first two children in the future, starting next month;
- All fuel duty frozen for a further year;
- Alcohol: 2p on pint of beer, 1p on pint of cider, 36p on bottle of whisky, 32p on bottle of gin;
- Transport: £90 million for the North, £23 million for the Midlands to improve traffic jams;
- Women: £20 million for campaign against violence on women and girls. £5 million to celebrate centenary of women getting vote;
- Sugar tax: up to 24p per litre for soft drinks with high sugar content;
- Hospitals to get a £325 million modernisation, plus £100 million to speed up A&Es services;
- Inflation to rise to 2,4 % this year before falling back to two percent;
- Crackdown on tax avoidance to raise £820 million;
- Free transport for children in England attending grammar schools who receive free school meal;
- Mobile phone calls made from outside the EU will be subject to VAT at 20 per cent for the first time;
- Motor insurance premiums will rise by 10 per cent – costing drivers an extra £50,00 on average;
- Crackdown on misleading small printing in terms and conditions;
- Making tax digital delayed: taxpayers supposed to submit their quarterly returns on line will be only obliged to join MTD on April 2019 (if sales are higher than the VAT threshold).
I hope you enjoy the reading.
Vertice Services director