I have kept this simple…it was a very small budget, less than a third normal size, and as far as I can see the pertinent points for you are:
- Income Tax – As previously announced, the personal allowance will be raised to £11,500 and the higher rate threshold to £45,000 from April 2017.
- National Insurance – The main rate of Class 4 National Insurance contributions to increase from 9% to 10% in April 2018 and 11% in April 2019.
- Dividends – The tax-free dividend allowance for shareholders will be reduced from £5,000 to £2,000 from April 2018.
- ISAs – As previously announced, the annual ISA allowance will increase to £20,000 from April 2017.
- Corporation Tax – Mr Hammond confirmed the level of corporation tax will fall, as was previously announced, to 19% for years beginning 1 April 2017 and then 17% in 2020.
In my opinion, this is a poor budget in many ways.
As you recall, dividend tax was changed last year. Up to that point you could get £43000 out of your business tax free…then the government hit us with the new rules- a £5000 free allowance, the rest at 7.5%-that little trick cost each of us just over £2000 in extra tax.
That £5000 allowance lasted one year! It is now £2000, costing us an EXTRA £225!
Last year the budget hit landlords hard…the wear and tear allowance (10% of rents) is now gone…you now have to claim the actual cost of replacement of goods.
Add that on to the gradual elimination of relief for interest paid on the property (That has GOT to be illegal) and you have a bit of a double whammy.
As for you self employed out there, a 2% hike on national insurance will hit hard.
Any light at the end of the tunnel? Corporation tax relief is welcome, certainly.
This is not a political blog…but come on…I did not expect this form a conservative government. The landlord tax is in my opinion illegal and the National insurance changes are in direct contravention of the electoral promises. Hammond says the Self employed tax “corrects” some of the discrepancies between employed and self employed…however self employed get NONE of the benefits of paternity pay, maternity pay, Annual holiday allowance or redundancy! It is all a bit disingenuous if you ask me.
As normal I am here for your questions…I just need a little time to work through this ever changing scenario!