News

Posted on 8th March

Spring Budget 2017

Well this was the first Budget made under the new regime of Philip Hammond or "Spreadsheet Phil "as he is known.

 

He did seem to have a smile on his face but it was neither dramatic or radical.

Most of the measures had already been made in the Autumn statement or leaked to the press over the last few weeks.

 

The OBR have increased their growth rates and I think this just goes to show that the rhetoric around Brexit has been unfounded. Clearly though we are in unchartered waters as expect changes in growth and inflation as Brexit unfolds.

The government is committed to reducing borrowings as the interest alone costs the Treasury each year more than the cost of funding the Defence Budget.

 

The Red Book which has just been published in a lot slimmer than usual in that it is only 67 pages with just 27 measures in 2016 this was over 100!

There are some main changes:

 

National Insurance rates for the self employed will rise from 2018 to 11% at the same time National Insurance Class 2 will be abolished.This is likely to be the start of measures to make self employed more aligned with the employed. Watch this space as there is more to follow.

 

The tax free dividend of £5000 per person will reduce to £2000 from April 2018. This will have an impact for anyone taking income from companies down the dividend route rather than the salary route. 

 

The annual ISA allowance does increase to £20,000 from April so it will not really have much of an impact for investment clients.

 

A National Savings Bond is to be introduced from April 2017. The maximum will be £3000 and the rate proposed is 2.2%.

 

A number of social care issues have been made but this will have no impact on individuals.

 

We had thought that some measures would be brought in with regards pensions but this seems to have been completely ignored so the current annual allowance and lifetime allowance remains in place. This is an extremely complex area it does bring in now considerable sums to the revenue but there was an opportunity to simplify matters. One measure which does come into effect is the Money Purchase Allowance which is set to fall from £10,000 to £4,000 from April 2017. This has an impact for anyone over the age of 55 taking pension benefits over and above the tax free cash allowance.

 

As usual there will be lots of debate over the coming days, should you need any further clarification or any last minute tax planning you wish to make before the end of this month please do not hesitate to contact us.