In Chancellor Philip Hammond’s first and last Spring Budget he wasn’t expected to pull any rabbits out of the hat and he didn’t.
The Chancellor reported on an economy that has continued to confound the commentators with robust growth, putting in place a strong and stable platform as the negotiations begin to exit the European Union. However has he flouted the Tory manifesto by imposing a dramatic tax hike on the self-employed? The Chancellor said the National Insurance rate for self-employed people would go up by 2 per cent by 2019. It means 2.4million people face an average tax rise of £240 - despite the Tory manifesto in 2015 ruling out any increase.
The main changes affecting our clients are;
- A welcome delay from 2018 to 2019 in the introduction of Making Tax Digital for unincorporated businesses with turnover up to the VAT threshold. We had hoped for further delay to HMRC’s bold plans but despite pressure from professional and trade bodies, the Government are pushing ahead and this will impact those above the VAT threshold from April 2018 with extra compliance costs;
- A reduction in the tax-free dividend allowance from £5,000 to £2,000 from April 2018;
- An increase in Class 4 NIC from 9% to 10% from April 2018 and a further increase to 11% from April 2019;
- Package of measures to give some relief to those small businesses particularly badly affected by business rates revaluation.
We will shortly have our full budget breakdown available to download in pdf but please feel free to call any member of the Hornby Team with any questions.