Budget 2017 – Highlights

The first budget was delivered by Chancellor Philip Hammond today, with the main losers being small businesses. We saw an increase taxation for the self-employed, a reduction in dividend allowances and an increase in the personal tax allowance.

Below we have drawn out the key areas of interest for Finura clients.

The state of the economy
• UK second-fastest growing economy in the G7 in 2016
• Growth forecast for 2017 upgraded from 1.4% to 2%
• GDP downgraded to 1.6%, 1.7%, 1.9% in subsequent years, then 2% in 2021-22
• Inflation forecast to rise to 2.4% in 2017-18 before falling to 2.3% and 2.0% in subsequent years

Personal taxation
• The main rate of Class 4 National Insurance contributions for the self-employed is to increase from current rate of 9% to 10% in April 2018 and 11% in April 2019
• This will raise £145m a year by 2021-22 at an average cost of 60p a week to those affected
• No changes to income tax, VAT or other National Insurance categories
• Personal tax-free allowance to rise as planned to £11,500 this year and to £12,500 by 2020

Dividend Allowance
• Reduction in tax-free dividend allowance for shareholders and directors of small private firms from £5,000 to £2,000 from April 2018
Pensions and savings
• Overseas pensions transfers (Qrops) will be hit with a 25 per cent tax

Business
• £435m for firms affected by increases in business rates, including £300m hardship fund for worst hit
• Increases for businesses losing existing relief will be capped at £50 a month
• A tax avoidance clampdown totalling £820m to include action to stop businesses converting capital losses into trading losses, tackle abuse of foreign pension schemes and introduce UK VAT on roaming telecoms services outside the EU

To discuss the implications and opportunities of any of these changes, please contact your Finura Partners adviser.