Philip Hammond, gave his first Spring Budget last week and we have highlighted below some of the main announcements that will affect businesses and some individuals.
A key change for self employed people is the announced increase of Class 4 National Insurance Contributions (NICs) from April 2018.From 2018, Class 2 NICs will be abolished. Class 4 NICs will rise to 10% in April 2018 and to 11% in April 2019. According to HMRC, ‘only a self-employed person with profits over £16,250 will have to pay more as a result of these changes’.PLEASE SEE UPDATE BELOW
- The relatively new tax free dividend allowance of £5,000 will reduce to £2,000 from April 2018.
- Making Tax Digital (MTD) will not become mandatory for small businesses and landlords with turnover below the VAT threshold until April 2019.
- Various changes announced in the Autumn Statement last year remain unchanged. Some of these are as follows:
- The National Living Wage will increase to £7.50 per hour from £7.20 from April 1017 and there will also be smaller increases in the National Minimum Wage.
- The personal allowance, which is the money you can earn before paying any tax, will increase to £11,500 from £11,000 in April 2017. It is expected to further increase to £12,500 by 2020.
- The thresholds for employee and employer National Insurance contributions will be equalised at £157 per week from April 2017
- The government is still committing to cut the rate of corporation tax to 17% by 2020
- Some salary sacrifice schemes will be stopped such as mobile phones, cars, healthcare (some arrangements will be protected until 2021) amongst others. Therefore employees will no longer receive these non cash benefits tax free. Salary sacrifice schemes for pensions, child care, ultra-low emission cars and cycling to work will not be affected
- Fuel duty will remain frozen next year.
Today, 15 March 2017, the Chancellor announced that the increase in Class 4 National Insurance Contributions will no longer go ahead. This is as a result of it being pointed out to him and the Prime Minister that an increase in NICs goes against their 2015 general election manifesto. Class 2 NICs will still be abolished from April 2018.