The Chancellor of The Exchequer has made his statement and HM Government’s fiscal policy is set for yet another year or not, as the Budget will move from Spring to Autumn this year.
The Chancellor was measured in his pronouncements, known as ‘spread-sheet Phil’, Mr Hammond has taken very cautious steps, the elephant in the room being Brexit as no one quite knows how the process will impact on the British economy. Rather than a giveaway budget this was a tentative effort, more about reducing borrowing than splashing the cash, some would say thank goodness for that.
From a business perspective, much depends on what kind of business and how large it is, the Budget was relatively kind to pubs, whereas some sole trader businesses are facing increases in NIC contributions.
The main points of interest are:
Self-employed people now face an increase in their National Insurance Contributions. Many people in recent years have opted for self-employment for a multitude of reasons and compared with employed people they have paid less in NI Contributions. The Chancellor has decided to reduce the gap. Those who are self-employed now pay 9% NIC on earnings above £8,060 compared with an employee on the same income paying 12%. A salary of £32,000 a year incurs £6,170 in NICs, while a self-employed individual on the same income pays just £2,300 in NICs. Because we all use the same public services it is seen as fairer that the gap will be closed. Class 2 NICs will be abolished and Class 4 NICs will increase by 1% in April 2018 and by 1% in April 2019. The increase will cost every self-employed person on average just 60p more a week in NICs.
The Chancellor confirmed the Government’s plan to reduce Corporation Tax to 19% from April 2017 and to 17% by 2020 aiming in so doing to make GB a more attractive location off-shore than the EU.
The Government will reduce the tax-free dividend allowance for Director-Shareholders from its present £5000 to £2000 from April 2018.
Mr. Hammond announced that the forthcoming ‘Making Tax Digital’ initiative is being deferred for a year coming into effect in April 2019 for unincorporated businesses and landlords with turnover below the VAT registration threshold. This will provide them with more time to prepare for the onset.
The National Living Wage from April 2017 will rise from £7.20 to £7.50 per hour for those aged 25 or over. The Government’s intention is to increase this to over £9 an hour by 2020.
Pubs and small businesses will receive extra help with their Business rates bill; the new measures mean that the vast majority of pubs in England will receive a small discount whilst small businesses that are about to lose their rate relief will see their increases capped at £50 per month.
VAT Registration threshold has been raised to £85,000 from £83,000, with de-registrations from £83,000.
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Member since: 25th November 2014
I work for Ashdown Hurrey, where I qualified as a chartered certified accountant in February 2014.
I joined the practice after completing my degree in accounting and finance at Manchester Metropolitan...