Spring Budget 2017

Please click here to see our summary of the key announcements in the Spring 2017 Budget. We hope you find it useful and interesting.

Chancellor Philip Hammond’s first, and last, Spring Budget was delivered at a pivotal moment for the UK as it readies itself to begin the process of leaving the EU. The Chancellor will announce a second Budget in the autumn as the Treasury changes to the new financial cycle from 2018. However, his first offering of 2017 contained several significant measures:

  • The dividend allowance will be cut from £5,000 to £2,000 from April 2018.
  • Self-employed workers will see their Class 4 national insurance contributions (NICs) increase by 1% to 10% in April 2018, with a further percentage point rise to 11% from April 2019. The government had previously announced that Class 2 NICs will be abolished from April 2018.​
  • The individual savings account (ISA) allowance will rise to £20,000 in April 2017 as previously announced.
  • The Chancellor confirmed the launch of a new NS&I investment bond from April 2017 that will pay a 2.2% rate over a three-year term on deposits of up to £3,000.

If you have any questions about the summary’s contents or how any aspects of your tax and financial planning may be affected by the Budget, please get in touch with us to discuss them. 

***UPDATE 15th MARCH***

The Chancellor has announced on 15 March that he will not be going ahead with his Budget proposal to increase the National Insurance Contribution rates for self-employed people.

In the Budget of 8 March 2017, he announced that Class 4 NIC rate for the self-employed would rise by 1% to 10% in 2018/19 and by a further 1% in 2019/20. The proposed increases provoked a widespread outcry, not least because the Conservatives 2015 election manifesto stated “we can commit to no increases in VAT, Income Tax or National Insurance.”

A week later, perhaps appropriately on the Ides of March, the Chancellor issued a letter to MPs saying that there would be no increase to Class 4 NICs “in this Parliament”. However, the abolition of Class 2 NICs will still go ahead from April 2018, meaning that the self-employed will generally see their NICs bill fall from 2018/19.

At Prime Minister’s Questions, Mrs May has said that the government would review areas of difference in the treatment of the employed and self-employed following a forthcoming report of modern working practices being prepared by Martin Taylor.  Mrs May’s comments reiterated a point made by the Chancellor, who also wrote in his letter that “The cost of the changes … will be funded by measures to be announced in the Autumn Budget.”

The Chancellor has announced on 15 March that he would not be going ahead with his Budget proposal to increase the National Insurance Contribution rates for self-employed people.

In the Budget of 8 March 2017, he announced that Class 4 NIC rate for the self-employed would rise by 1% to 10% in 2018/19 and by a further 1% in 2019/20. The proposed increases provoked a widespread outcry, not least because the Conservatives 2015 election manifesto stated “we can commit to no increases in VAT, Income Tax or National Insurance.”

A week later, perhaps appropriately on the Ides of March, the Chancellor issued a letter to MPs saying that there would be no increase to Class 4 NICs “in this Parliament”. However, the abolition of Class 2 NICs will still go ahead from April 2018, meaning that the self-employed will generally see their NICs bill fall from 2018/19.

At Prime Minister’s Questions, Mrs May has said that the government would review areas of difference in the treatment of the employed and self-employed following a forthcoming report of modern working practices being prepared by Martin Taylor.  Mrs May’s comments reiterated a point made by the Chancellor, who also wrote in his letter that “The cost of the changes … will be funded by measures to be announced in the Autumn Budget.”

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The information regarding taxation is based on our understanding of law, HM Revenue & Customs practice and current legislation, which may be altered and depends on the individual financial circumstances of the investor. The value of investments may fall as well as rise.

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