Philip Hammond delivered his final Spring Budget today – in future the Budget will be given in the Autumn.
The main points arising from the budget are:
Making Tax Digital will be deferred for landlords and unincorporated businesses with turnover below the VAT threshold, for a period of 12 months. There is however no change in the ultimate threshold at which MTD will apply, this remains at £10,000. Making Tax Digital will therefore apply for everyone below the VAT threshold from April 2019. With a gross turnover level set at £10,000, just about everyone will be caught by it.
NIC contributions for the self-employed will increase from April 2018, from the current level of 9% to 10%, and 11% the year after. Class 2 NIC will be abolished at the same time. The Chancellor has announced that this is to address the inbalance that the self-employed enjoy over the employed – ignoring the fact that the self-employed enjoy none of the benefits that employees enjoy, such as paid holiday, etc.
The Dividend Tax 0% band, orginally set at £5,000, will be drastically reduced from April 2018 to just £2,000. There has been concern raised by Professional Bodies that this will be reduced further or even abolished. The cost of this to basic rate taxpayers will be £225 per annum.
The announcements made today will, for the most part, not take place until April next year.
The Personal Allowance for 2017-18 was set in the 2016 budget at £11,500, with the basic rate band covering income up to £33,500. Therefore the higher rate threshold is £45,000.
I will be sending out Budget booklets to my clients at the weekend.
Contact me to make an appointment to discuss what the Budget might mean for you.
UPDATE: On the 15th March Chancellor Philip Hammond announced that the NIC Contribution rates for the self-employed will NOT be increased, remaining at 9%.