Surrey MP, Philip Hammond gave his first and last Spring Budget on Wednesday. There wasn’t much in the way of tax content but enough to cause considerable discussion on the news programmes.
Key measures announced include:
•The increase in the personal allowance from £11,000 to £11,500. The basic rate band has increased from £32,000 to £35,000.
•A reduction in the new dividend allowance from £5,000 to £2,000 from 6 April 2018. This will cost owner/managers of limited companies approximately £225 per year.
•An increase in the rate of Class 4 national insurance for the self-employed from 9% to 10%. This measure will also take effect from 6 April 2018 and with the abolition of Class 2 National insurance will cost the self-employed earner with profits in excess of £45,000 an additional £240 per year.
•The new system for Self-Assessment will be delayed for businesses with turnover of less than £85,000 until April 2019. All other self-employed businesses will have to file quarterly from April 2018. Consultations are still taking place on the details for this and we are monitoring the position closely.
•With more immediate impact, two new allowances were introduced of £1,000 each will be introduced for the 2017/18 tax year for property and trading income. These allowances don’t apply to partnerships but will allow individuals with small amounts of untaxed income to avoid having to complete a tax return. For those with income in excess of £1,000, you will have the option either to deduct your expenses from the income or deduct the allowance instead.
•There are proposals to change the way in which termination payments are taxed from 6 April 2018. At present, the first £30,000 of payments is exempt from tax and National insurance. From 6 April 2018, it is proposed that only genuine termination payments will be exempt from tax and national insurance.
If you would like to know more about the impact the Budget changes will have for you, please don’t hesitate to contact Liz Noble on 01276 25542.