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Take a look at this budget summary of the items within it that relate to business. Please feel free to give us a ring if you wish to discuss any of the subjects listed below in more depth. We are only too happy to run through it with you.
It was confirmed that the headline rate of corporation tax will fall to 17% by 2020. The present rate of 20% will reduce to 19% from 6 April 2017.
The 2017/18 Personal Allowance increases from £11,000 to £11,500 and the Higher Rate tax threshold will increase from £43,000 to £45,000.
From 6 April 2017, there will be a £1,000 allowance against property income and a £1,000 allowance against trading income.
The Chancellor announced a reduction in the dividend allowance with effect from April 2018.
The dividend allowance for 2016/2017 and 2017/2018 is £5,000. From April 2018, this will be decreased to £2,000.
The tax rates which apply over the dividend allowance are 7.5% on dividend income within the basic rate band, 32.5% on dividend income within the higher rate band, and 38.1% on dividend income within the additional rate band.
National Insurance Contributions (NICs)
Currently, the self-employed have to pay both Class 4 and Class 2 NICs.
Class 2 National Insurance, a separate flat rate contribution paid by self-employed workers making a profit of more than £5,965 a year, is to be scrapped as planned in April 2018
The main rate of Class 4 NICs will increase from current rate of 9% to 10% in April 2018 and to 11% in April 2019.
Employees NICs remain unchanged at 12% up to the Upper Earnings Limit and 2% above this.
New rules for Landlords with buy-to-let mortgages will be phased in over 4 years from April 2017, tax relief on mortgage interest will be limited to 20% which will mean that landlords who are higher or additional rate tax payers may face a higher tax liability than at present.
Capital Gains Tax
If you are a basic rate income tax payer then Capital Gains Tax is chargeable at 18% on your gains from residential property, and 10% on your gains from other chargeable assets for the 2017/18 tax year. If you are a higher or additional rate income tax payer, then you’ll pay 28% and 20% respectively.
The Inheritance Tax (IHT) Nil Rate Band remains unchanged at £325,000.
However, from 2017, each individual receives an additional £100,000 allowance in respect of their main residence if this is left to direct descendants.
This is planned to increase in stages over the next few years, to £175,000 by tax year 2020/21. This will mean that by 2021, couples with a sufficient property value can potentially leave £1 million free of IHT.
Saving and Investing
Individual Savings Accounts (ISAs)
For the 2017/18 tax year, the overall ISA subscription limit will increase to £20,000.
The Lifetime ISA
The Lifetime ISA will be available from 6 April 2017 for those aged 18 or over but under 40 with an annual payment limit of £4,000 per tax year. For every pound saved, the government contributes a 25% bonus.
Terms and conditions will apply including a 25% charge (payable to HMRC) on amounts withdrawn for certain types of withdrawal.
The Chancellor confirmed the rate for the previously announced NS&I Investment Bond. The rate will be 2.2% Gross AER, over a term of 3 years and will be available for 12 months from April 2017, to anyone aged 16 and over, holding a UK bank account. Minimum investment will be £100 and maximum will be £3,000.
Other notable updates
Making tax digital
Small businesses and landlords under the VAT registration threshold will have an extra year to prepare for Making Tax Digital (MTD).
Business rates revaluation:
Three measures were announced to help struggling firms:
1) Any business coming out of small business rate relief will get a cap – business rates bills will not increase by more than £50 a month
2) For pubs – there will be £1,000 discount on business rates for those with a rateable value less than £100,000
3) Local councils to get a fund of £300m for discretionary relief for individual cases
Insurance Premium Tax (IPT)
IPT was previously announced to be increasing from 10% to 12% from 1 June 2017.
Tobacco duty rates
Duty rates on all tobacco products will increase by 2% above RPI Inflation. The RPI Inflation figure currently quoted is 2.6%.
The Chancellor also announced the introduction of a Minimum Excise Tax for cigarettes, which is specifically stated to target the cheapest tobacco products. The rate will be set at £268.63 per 1,000 cigarettes. It will take effect from 20 May 2017.
From 13 March 2017, the duty rates on beer, cider, wine and spirits will increase by RPI Inflation.
Vehicle Excise Duty has gone up by RPI with effect from 1 April 2017.
Soft Drinks Industry Levy
The levy rate for added sugar drinks with a total sugar content of 5 grams or more per 100ml will be set at 18 pence per litre, and those above 8 grams per 100ml will be set at 24 pence per litre.