THE VALUE OF PENSIONS AND INVESTMENTS AND THE INCOME THEY PRODUCE CAN FALL AS WELL AS RISE, YOU MAY GET BACK LESS THAN YOU INVEST.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Chancellor, Phillip Hammond summarised his Spring budget by saying “We’re moving towards a ‘more tax, less spend’ model.” This was evidenced with the announcement that National Insurance Contributions changes will look to reduce the difference between the self-employed and their counterparts, rising to 11% in the next two years, while the tax-free dividend allowance, which is arguably more significant will be lowered to £2,000 in April 2018.
On the rates relief side, there is a £435m package to ease the pain with the rise of new business rates. It’s worth remembering policies announced in previous budgets that are about to take effect such as the apprenticeship levy, which comes into effect this April.
From April 2017, corporation tax will fall to 19%, the lowest rate in the G20. In 2020 it will fall again to 17%. However, the self-employed could face a rise on their tax bill with Class 4 contributions by the self-employed increasing to 10% in April 2018, with a further 1% in 2019.
The National Living Wage rises to £7.50 an hour in April. Personal tax allowances are £11,500 for basic rate taxpayers.
Tax-free childcare will soon be available to working parents of up to £2,000 a year for each child under 12 years. Parents with disabled children will receive up to £4,000 for disabled children up to the age of 17. This scheme begins next month, rolling out first to parents of younger children, with all eligible parents able to access the cuts by the end of the year.
Theresa May unveiled a boost for women just ahead of the Budget: a £5m fund to support ‘return ships’, a scheme that helps people rebuild CVs by taking on short-term assignments for firms. It is open to men but is targeted at women who left professional positions to bring up families. Today’s Budget also allotted £20m to support the campaign against violence against women and girls.
The chancellor says “putting the next generation first to safeguard their future and to secure our economy” will include the introduction of T-levels – technical qualifications, an alternative to A-levels – for 16- to 19-year-olds. Existing schools will benefit from an increased investment of £216m. Free school transport will be extended to all children on free school meals who attend a selective school.
There will be £300m allotted to support 1,000 new PhD places and fellowships in STEM (science, technology, engineering and maths) subjects. A further £270m will be invested in disruptive technologies such as robotics and driverless vehicles.
Business rates represent £25bn a year and as such will not be abolished. However, there will be £435m of measures aimed at easing the burden of those hardest hit. Any enterprise coming out of small business rate relief will benefit from an extra cap, meaning their rates will not increase by more than £50 a month. Some 90% of local pubs will have a £1,000 discount on their business rates bill and there will be a £300m fund for local councils to offer discretionary relief.
Small businesses and landlords under the VAT threshold will have an extra year to prepare for Making Tax Digital (MTD). Businesses owned privately by one or more people with an annual turnover below the VAT registration threshold will have until April 2019 to prepare before MTD becomes mandatory.
The UK was the second fastest-growing economy in the G7 in 2016. As expected, the independent Office for Budget Responsibility has upgraded its forecast for growth next year from 1.4% to 2%. Inflation is forecast at 2.4% this year, 2.3% next year and 2% in 2019. Along with a further 650,000 people who are expected to be in employment by 2021.
Transport & Infrastructure
£500m support has been allotted for electric vehicles, robotics and artificial intelligence. There will be a £220m fund. That addresses pinch points on the national road network. A £690m competition for local authorities across England to tackle urban congestion. Also Vehicle excise duty rates for hauliers and the HGV Road User Levy are frozen for another year. Plans for a £16m 5G network will start.