The Chancellor Philip Hammond presented the last Spring Budget on Wednesday 8 March 2017
In his speech the Chancellor was keen to point out that he wanted the tax system to be fair, particularly in relation to the distinction between employed and self-employed individuals.
Our summary concentrates on the tax measures which include:
- • increases to the Class 4 National Insurance rates
- • a reduction in the Dividend Allowance
- • changes to the timing of Making Tax Digital for smaller businesses (see below)
Previously announced measures include:
- • increases to the personal allowance and basic rate band (a decreased band for Scottish residents)
- • the introduction of the Apprenticeship Levy
- • changes to corporation tax loss relief
- • the introduction of an additional inheritance tax residence nil rate band
- • changes for non-UK domiciled individuals.
Making Tax Digital for Business (MTDfB)
Please be aware, if you are not already, that this budget introduced the biggest and most extensive changes to how taxpayers record and report income to HMRC for a generation.
These changes are being introduced under a project entitled Making Tax Digital for Business. Under MTDfB, businesses, self-employed people and landlords will be required to:
- • maintain their records digitally, through software or apps
- • report summary information to HMRC quarterly through their ‘digital tax accounts’ (DTAs)
- • make an ‘End of Year’ declaration through their DTAs.
DTAs are like online bank accounts – secure areas where a business can see all of its tax details in one place and interact with HMRC digitally.
Businesses, self-employed people and landlords with turnovers under £10,000 are exempt from these requirements.
Changes announced in the Budget
The government has now announced a one year deferral from the mandating of MTDfB for unincorporated businesses and unincorporated landlords with turnovers below the VAT threshold. For those that have turnovers in excess of the VAT threshold the commencement date will be from the start of accounting periods which begin after 5 April 2018.
We will be assessing our clients’ needs in relation to Making Tax Digital in the coming months and coming back to you with our proposals.
Please click on the link below to go to our full Spring Budget 2017 summary:
We have also prepared a handy Pocket Guide of the 2017/18 Tax Rates for you to use as a reference:
NB: Correction to Budget Summary:
One of the significant announcements Chancellor Philip Hammond made on Budget Day was the proposed increases to the main rate of Class 4 National Insurance Contributions (NICs) paid by self-employed individuals. As stated in our Budget summary, the rate was to increase from 9% to 10% from April 2018 with a further increase planned from 10% to 11% from April 2019.
The Chancellor has announced that the government will not now proceed with the proposed increase in Class 4 NICs rates. Self-employed individuals currently pay Class 2 and Class 4 NICs. Class 2 NICs are to be abolished from April 2018.
If you have any questions or comments about the 2017 Spring Budget, do not hesitate to get in touch.