Phillip Hammond of the British Conservative Party has delivered his first budget, outlining the governments plans for both the economy and public finances. We at Benchmark International have put together a summary of all this, highlighting the most important points and explaining just what kind of impact they will have on the average taxpayer.
As of April 2017 – new announcements:
Package of measures to give some relief to small businesses who were badly affected by business rates revaluation.
The threshold for simplified cash basis accounting for self-employed businesses raised from VAT registration threshold to £150,000 for 2017/18, extending to landlords.
As of April 2017 – previously announced:
Income Tax rates and allowances confirmed as announced at the 2016 Budget – tax free personal allowance will be £11,500, with the threshold for 40% tax being £45,000.
National Insurance thresholds for employers and employees made consistent at £157 per week.
Tax and National Insurance advantages of ‘salary sacrifice’ schemes withdrawn, apart from arrangements involving pensions, childcare, Cycle to Work and ultra-low emission cars.
New £1,000 tax-free allowances for trading and property income will apply for the 2017/18 tax year.
New tax-free childcare arrangements to be introduced on a trial basis and rolled out to all taxpayers over the coming year.
Tax advantages of foreign domiciled status will be lost for those resident in the UK for 15 of the last 20 years, and UK property held by a foreign domiciled individual through offshore structures becomes chargeable to Inheritance Tax.
ISA investment limit rises from £15,240 up to £20,000 per year, of which £4,000 can be in the new ‘lifetime ISA’.
Public sector employers become responsible for tax due from individuals working for them through personal service companies and similar arrangements where there is an underlying employment relationship.
Limit on pension contributions for those who have already made a flexible income drawdown form a money purchase pension scheme will be slashed from £10,000 per year down to £4,000. Limit for those who have not made such a drawdown remains at £40,000.
Main rate of Corporate Tax falls to 19% as of the 1st April 2017.
Benefit of VAT Flat Rate Scheme almost completely withdrawn for businesses spending less than 2% of their turnover of less than £1,000 per year on goods, excluding capital goods, food, vehicles and fuel.
Reforms to restrict interest relief and amend the rules for brought forward losses for corporation tax.
As of 1st June 2017, Insurance Premium Tax rises from 10% to 12%.
As of April 2018 – new announcements:
‘Making Tax Digital’ reforms require businesses and landlords with a turnover above the VAT registration threshold (£85,000 for 2017/18) to make quarterly online reports updating their tax position. However, those businesses below the threshold will not be affected until April 2019, when the threshold will be £10,000.
Class 4 National Insurance Contributions rate on profits between lower threshold and upper limit (for 2017/18: £8,164 to £45,000) rises from 9% to 10% (and from 10% to 11% in April 2019).
Nil rate band for dividend income, introduced at £5,000 for tax year 2016/17, reduced to £2,000 for 2018/19.
As of April 2018 – previously announced:
Class 2 National Insurance Contributions for the self-employed abolished.
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