On 8 March 2017, the Chancellor of the Exchequer, Philip Hammond delivered the 2017 Spring Budget. It was notably shorter than the Autumn Statement delivered in November 2016, but there are still some key points you should take note of. See our summary below.
- The UK is forecast to be the second fastest growing G7 economy in 2017, with Germany topping the list in that respect.
- GDP growth in 2017 was revised up to 2.0% and is expected to slow down to 1.6% in 2018. This is predicted to be followed by a recovery to 1.7% in 2019, 1.9% in 2020 and finally 2% in 2021.
- Government borrowing is lower in every year of the forecast when compared with 2016’s Autumn Statement, and it is expected to fall to £16.8 billion or 0.7% of GDP by 2021/22.
- The deficit in 2016/17 is predicted to be £16.4 billion lower than had been forecast in the 2016 Autumn Statement. The prediction is that the deficit will contract from £59 billion to £58.3 billion in 2017/18, and from £46.5 billion to £40.8 billion in 2018/19.
- Inflation is set to reach 2.4% in 2017, falling to 2.3% in 2018 and then to 2.0% in 2019.
- There will be a new National 5G Innovation Network to trial and demonstrate 5G applications. The first phase will involve the government investing up to £16 million in a cutting edge 5G facility.
- Personal Allowance increases to £11,500 from 2017, rising to £12,500 by the end of parliament. The 40% tax threshold was lifted to £45,000 and will increase to £50,000 by the end of the current parliament, as previously promised.
- The tax-free Dividend Allowance will be reduced from £5,000 to £2,000 in April 2018.
- National minimum wage for those over 25 to increase from £7.20 to £7.50 – an estimated increase of £500 per year for full-time workers.
- From April 2017, Inheritance Tax will be charged on UK residential property when it is held within a company or a trust.
- The government will roll out Tax-Free Childcare for working families with children under 12. This will provide up to £2,000 a year for each child to help with childcare costs. From September 2017, the free childcare offer will double, from 15 to 30 hours a week for working families with three- and four-year-olds in England, worth up to £5,000 in total for each child.
- The ISA allowance will increase to £20,000 from April 2017.
Businesses and employers
- Corporation Tax to be reduced to 19% from 1 April 2017, with a further reduction to 17% by 2020. This would make it the lowest corporate tax rate in the G20.
- The VAT registration threshold will increase from £83,000 to £85,000 from 1 April 2017.
- As of 6 April 2017, changes will come into effect for those working for a public sector organisation, engaged through an intermediary, such as a personal service company (PSC).
- The business rates revaluation takes effect in England from 1 April 2017. The government will set aside funds to provide support for small businesses losing small business rate relief to limit increases in their bills to the greater of £600 or the real terms transitional relief cap for small businesses each year.
- The government will also introduce a £1,000 business rate discount for public houses with a rateable value of up to £100,000, subject to state aid limits for businesses with multiple properties, for one year from 1 April 2017.
- The government will remove the ability for businesses to convert capital losses into trading losses from 8 March 2017.
- Flat-rate VAT industry percentages will be abolished and replaced with a flat 16.50% rate from April 2017.
- Class 2 National Insurance contributions (NICs) – a flat rate charge on the self-employed – will be abolished from April 2018.
- Class 4 NICs will increase from 9% to 10% in April 2018, and to 11% in April 2019.