Holborn Assets Reviews the UK Spring Budget 2017
Posted on: 10-03-2017 in Holborn Assets
What’s big?
The main news is a “2% stealth tax” on self-employed Brits, with changes to the National Insurance Contribution system coming in next tax year.
Personal Finance
Income Tax
- Personal tax-free allowance rises – for the seventh year running – up to £11,500 this tax year.
- High rate minimum threshold rises to £45,000.
Inheritance Tax
- Family home allowance: a tax-free allowance comes in for the first time this tax year on properties that are being passed directly (ie. not through a discretionary trust) on to direct descendants – with the allowance rising according to a sliding scale until 2020, when the combined allowances of a married couple will mean that they can potentially pass on £1m of assets tax-free.
Pensions
- A tax charge of 25% is made on the transfer amount going in to the QROPS, if the transfer is outside the EU (this does not apply to EU).
- Lifetime Allowance currently at £1m – ie. that’s how much you can save into a pension over a lifetime.
UK Self-employed
- Millions of UK self-employed workers will be paying 2% tax more in National Insurance Contributions.
- Class 2 NICs will be abolished altogether, but Class 4 NICs for the self-employed will increase from 9% to 10% next tax year, and 11% in 2019.
- Chancellor Hammond says that all self-employed people earning less than £16,250 will pay less NI as a result.
NS&I & Isas
- A new bond will be available for savers returning 2.2% on investment up to £3,000.
- Lifetime ISA coming in this tax year (to join 5 other types of ISA).
- ISA limit rising from £15,240 to £20,000 this tax year.
UK Sectors & Business
UK Consumers
- No change to alcohol duties, but a minimum excise duty of £7.35 to come in per packet of cigarettes.
- Sugar levy confirmed at !8p and 24p per litre for big brands.
UK SMEs
- Business rates generate £25bn a year.
- 90% of pubs to receive £1K discount on their business rates.
- Companies leaving Small Business Rate Relief to have any rates increase capped to £50 per month.
- Directors of SMEs will only be able to withdraw £2000 a year as tax-free dividends from 2018 – down from a current tax-free dividend allowance of £5000.
NHS & Care
- “Additional grant funding of £2bn to social care in England over the next 3 years to “deliver immediate benefit to NHS”.
Housing
- Buy-to-Let Changes announced in 2015 mean that, from April 6th this year, BTL landlords will only be able to deduct 75% of mortgage interest against their rental income in tax calculations. This deductible percentage is being decreased by 25% each year until 2020-2021, when it will no longer be possible to deduct any mortgage interest at all.
Education
- New system of “T-levels” to roll-out in technical qualifications.
Government Benefits
- Universal Credit taper rate to be reduced from 65% to 63% this tax year – reducing tax for 3m low-income families.
- Tax-free childcare policy to pay out £2k a year to eligible parents of children aged under 12.
- (National Living Wage will rise to £7.50 this tax year)
Other
- £90m extra transport spending for North of England, and £23m for the Midlands.
- £16m for a new 5G tech hub, £200 for local fibre broadband projects, £300m for biotech studies.
UK Treasury
- UK debt stands at £1.7 trillion – that’s almost 87% of the UK’s GDP.
- The UK debt/GDP ratio is expected to decline to 80% by 2021/2022.
- The ratio of public sector net borrowing to GDP is to be trimmed back from 3.5% to 2.6%.
- UK inflation will rise to 2.4% in 2017.
