Chancellor Philip Hammond delivered his 2017 Spring Budget on 8 March, setting out the government’s latest plans for the nation’s finances.
So here are some of the key points:
Tax and National Insurance
• As previously announced, the tax-free personal allowance will increase in April 2017 to £11,500. Also confirmed is that higher-rate threshold will increase to £45,000 in 2017-18.
• The main rate of Class 4 National Insurance contributions (NICs) will increase from 9% to 10% in April 2018 and to 11% in April 2019. The government says this is to reduce the gap in rates paid by the self-employed and employees, and to reflect the introduction of the new State Pension to which the self-employed have the same access.
• The dividend allowance will be reduced from £5,000 to £2,000 from April 2018, to reduce the tax differential between the self-employed and employed, and those working through a company.
• The HMRC is actively monitoring National Insurance Employment Allowance compliance following reports of some businesses using avoidance schemes to avoid paying the correct amount of NICs. The government says it will consider taking further action if this avoidance continues.
• The government will provide an extra year, until April 2019, before Making Tax Digital is mandated for unincorporated businesses and landlords with turnover below the VAT threshold. This will provide them with more time to prepare for digital record keeping and quarterly updates. The government will also consult on the design aspects of the tax administration system, including interest and penalties, with the aim of adopting a consistent approach across taxes.
• Following consultation, the government will increase the cash basis entry threshold to £150,000, and exit threshold to £300,000, and will extend the use of the cash basis to unincorporated landlords. The government will also simplify the rules on capital and revenue expenditure within the cash basis, to make it easier for businesses to work out whether their expenditure is deductible for tax.
• HMRC will work constructively with businesses and interested parties to consult over the summer on its process for risk profiling large businesses and promoting stronger compliance.
• The government will shortly begin rolling out Tax-Free Childcare (TFC) for working families with children under 12, providing up to £2,000 a year for each child to help with childcare costs. From September 2017, the free childcare offer will double, from 15 to 30 hours a week for working families with three- and four-year-olds in England, in total worth up to £5,000 for each child.
Tax credit debt
• As announced by the Secretary of State on 9 February 2017, DWP will recover a volume of HMRC tax credit debt using its existing powers including the use of Direct Earnings Attachment.
• The government will amend the tax registration process for master trust pension schemes to align with the Pensions Regulator’s new authorisation and supervision regime. This will help to boost consumer protection and improve compliance.
• The government is carrying out the first statutory review of State Pension age. The government will consider all the evidence – including an independent report by John Cridland – before publishing its review by 7 May 2017.