8 March 2017
In terms of the speech itself the Chancellor said relatively little about tax related matters, just a few mentions as follows:
- A promise to reduce the administrative burden surrounding the generous R&D tax credit regime for corporations;
- A welcome delay to the introduction of Making Tax Digital for those with turnover below the VAT threshold – April 19 start date for them rather than April 18. Unincorporated businesses and landlords whose turnover exceeds the VAT registration threshold will still be MTD guinea pigs in just over a year’s time though, and we’ll be continuing to publish lots on that topic in coming months;
- Business rates are going up, as pre-announced. But there will be some respite for pubs, and a cap on the increases in 2017 for most businesses. Also some local authority discretionary powers / funding;
- Class 4 (self employed) National Insurance rates are set to increase – 9% now, 10% in April 18 and 11% in April 19. Much closer to the 12% / 13.8% that employees / employers pay;
- Dividends will continue to become more expensive as the dividend allowance is cut – currently £5,000 at 0% tax, but only £2,000 at 0% from April 18.
And that’s about all Mr Hammond said on the topic of taxes.
Of course, that’s not the end of the story. There’s bound to be some written material that didn’t make the speech, and maybe more importantly there are a raft of pre-announced measures which are set to take effect in April 17 or soon after. A selection of those are:
- Insurance Premium Tax increases another 2% in June 17;
- Salary sacrifice changes taking effect April 17;
- Money Purchase Annual Allowance (pension contributions for those in flexi access) cut to £4,000 p/a from April 17;
- VAT flat rate scheme 16.5% rate for ‘limited cost traders’ from April 17;
- ‘Public Sector Bodies’ becoming responsible for IR35 decision making from April 17;
- Launch of ‘Lifetime ISAs’;
- Corporation Tax cut to 19% from April 17;
- Corporation Tax loss relief reforms taking effect April 17 – more generous for smaller entities and only less generous for brought forward losses > £5m;
- Abolition of Class 2 NI April 18;
- £1,000 tax free allowances for either self employment, property income, or both (“AirBnB allowance” / “eBay allowance”) April 17;
- Clampdown on tax free termination payments April 17;
- Inheritance Tax “Residence Nil Rate Band” phased in, between April 17 and April 20;
- Further changes to the taxation of non-dom individuals and trusts April 17;
- Apprenticeship Levy kicks in for payroll bills in excess of £3m April 17.
We’ll be publishing a fuller Budget write up in a day or two, and of course will be poring over the written documents emanating from the Treasury and HMRC in respect of the Budget, and keenly awaiting the final draft of the Finance Bill (hopefully with the promised Making Tax Digital Statutory Instruments) due for publication on 20 March 2017.