Chancellor Hammond today claimed to be preparing for a European exit by 'building a stronger, fairer, more global Britain'.
He confirmed that the Corporation Tax rate continues to be reduced to meet his Government's target of bringing it down to 17% by 2020. For individual taxpayers the Personal Tax Allowance for the coming year has already been set at £11,500 with the basic rate of 20% being charged on the first £35,500 of income over the tax free allowance.
The Chancellor did provide a surprise, however when he announced that the 0% Dividend Allowance of £5000 was to be reduced to £2000 from April 2018. This will adversely affect limited company contractors who take a significant part of their reward from their company by way of dividends.
For the self-employed operating as sole traders or partners in a business was that, although Class 2 National Insurance Contributions are being abolished, there is to be an increase in Class 4 contributions of 1% to 10% charged on profits over £16,250 from April 2018 and up by a further 1% in April 2019. This approach appears to be connected with the Government's perception that it needs to improve fairness in tax levels between the employed and the self-employed and a more detailed report has already been commissioned to examine the issue.
Also amongst the Spring Budget 2017 papers were the previously announced measures confirming that from 6 April 2017, the off payroll rules will be operated by public sector organisations in the public sector.
Some of the other headlines today were:
- The VAT registration threshold increases to £85,000 (from £83,000) on 1 April 2017
- Efforts will be made to simplify the administration required when businesses make R&D claims
- Increased measures and efforts to clampdown on tax avoidance in specific areas
- A review of North Sea oil production taxation is to be carried out
- Smaller businesses affected by coming out of the Small Business Rates scheme will have their additional rates capped
- New support for technical education and increased investment in schools was announced
- Additional funds for social care over the next 3 years up to £3bn with £1bn in the first year are to be made available
- An increase in rates of vehicle excise duty for cars, vans and motorcycles in line with the Retail Price Index
- A new Industrial Strategy Challenge Fund (ISCF) supporting collaborations between business and the UK’s science base. An initial £270m to kick-start development in areas like electric powered vehicles, cutting edge AI and robotic systems, new drugs and treatments. Hopefully opening up opportunities for contractors.
- Making Tax Digital and the need to make quarterly returns will be deferred to April 2018 for unincorporated businesses with a turnover of less than the VAT threshold giving them more time to prepare