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2017 Budget - quick summary

2017 Budget - quick summary

Posted on 9/03/2017 by Charlene Bennett

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Philip Hammond has delivered his first Budget as chancellor. We will share a detailed report going over everything you and your business will need to be aware of soon, but in the meantime here is a summary to get you up to speed.

The main pull out points:

  • No changes in National Insurance rates or to income tax or VAT for the employed or employees
  • Personal tax-free allowance to rise as to £11,500 this year
  • Increase in National Insurance rates for the self-employed
  • Privately-owned SMEs to get extra year to prepare for tax digitisation and quarterly reporting
  • Reduction in tax-free allowance on share dividends from £5,000 to £2,000
  • Dividend income paid on shares held in a stocks and shares ISA will remain tax free
  • Fuel duty frozen for a further year
  • Funding of £5m to support people returning to work after a career break

The full summary of the key points taken from the BBC:


Personal taxation

  • There will be no changes in National Insurance rates or to income tax or VAT for the employed or employees
  • The personal tax-free allowance to rise as planned to £11,500 this year and to £12,500 by 2020

Increase in National Insurance rates for the self-employed

  • The main rate of Class 4 National Insurance contributions for the self-employed to increase from 9% to 10% in April 2018 and 11% in April 2019
  • The increases, applying to earnings between £8,060 and £43,000, will raise £145m a year by 2021-22 at an average cost of 60p a week to those affected. All Class 4 earnings above £43,000 will continue to be taxed at 2% while those below £8,060 will pay nothing.
  • 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
  • Taken together, millions of self-employed workers could pay an average of £240 a year more but ministers say those earning £16,250 or less will pay less

Business

  • Privately-owned SMEs to get extra year to prepare for tax digitisation and quarterly reporting
  • Rate rises for businesses losing existing relief will be capped at £50 a month
  • £435m for firms affected by increases in business rates, including £300m hardship fund for worst hit
  • Pubs with rateable value
  • A £820m tax avoidance clampdown, including action to stop businesses converting capital losses into trading losses and introduction of UK VAT on roaming telecoms services outside the EU

Pensions and savings

  • Reduction in tax-free allowance on share dividends from £5,000 to £2,000
  • The measure, affecting small business owners and investors, will come into force in April 2018, raising £2.63bn by 2021-2022
  • Dividend income paid on shares held in a stocks and shares ISA will remain tax free
  • Measures to tackle abuse of overseas pension schemes

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%. But GDP downgraded to 1.6%, 1.7%, 1.9% in subsequent years, then 2% in 2021-22
  • Annual rate of inflation forecast to rise from 2.3% to 2.4% in 2017-18 before falling to 2.3% and 2.0% in subsequent years
  • A further 650,000 people expected to be in employment by 2021

Alcohol, tobacco, gambling and fuel

  • Fuel duty frozen for a further year
  • Vehicle excise duty rates for hauliers and the HGV Road User Levy frozen for another year
  • No increases in alcohol or tobacco duties on top of those previously announced
  • A new minimum excise duty on cigarettes based on a packet price of £7.35
  • Tobacco will rise by 2% above Retail Price Index (RPI) inflation, with a packet of 20 cigarettes costing 35p more
  • Duty on beer, cider, wine and spirits will increase in line with RPI inflation
  • This will equate to 2p on a pint of beer, 1p on a pint of cider, 36p on a bottle of whisky and 32p on a bottle of gin

Women

  • New funding totalling £20m to support the campaign against violence against women and girls
  • A further £5m committed to project to celebrate the centenary of women first getting the vote, and to educate young people about its significance
  • Funding of £5m to support people returning to work after a career break

Public borrowing/ deficit/ spending

  • Annual borrowing £51.7bn in 2016-17, £16.4bn lower than forecast
  • Borrowing forecast to total £58.3bn in 2017-18, £40.6bn in 2018-19, £21.4bn in 2019-20 and £20.6bn in 2020-21
  • Public sector net borrowing forecast to fall from 3.8% of GDP last year to 2.6% this year, then 2.9%, 1.9%, 1% and 0.9% in subsequent years, reaching 0.7% in 2021-22. But borrowing still predicted to be £100bn higher by 2020 than forecast in March 2016
  • Debt rose to 86.6% this year, but will fall to 79.8% in 2021-22

Education (England only)

  • £300m to support 1,000 new PhD places and fellowships in STEM (science, technology, engineering and maths) subjects
  • Free school transport extended to all children on free school meals who attend a selective school
  • Upgrade fund of £216m for existing schools
  • £320m of funding for 110 new free schools and grammar schools
  • New T-Levels to be introduced to give parity of esteem for technical education
  • Number of hours of training for technical students aged 16 to 19 increased by more than 50%, including a high-quality, three-month work placement

Health and social care

  • £100m to place more GPs in accident and emergency departments for next winter
  • Additional £325m to allow the first NHS Sustainability and Transformation Plans to proceed
  • An extra £2bn for social care
  • Long-term funding options to be considered but so-called "death tax" on estates ruled out
  • Most sugary soft drinks to be taxed at 24p per litre as part of plans to reduce childhood obesity

Housing/ infrastructure/ transport/ regions/ science

  • Transport spending of £90m for the north of England and £23m for the Midlands to address pinch points on roads
  • £690 million competition fund for English councils to tackle urban congestion
  • £270m for new technologies such as robots and driverless vehicles
  • £16m for 5G mobile technology and £200m for local broadband networks
  • £250m in funding for Scottish Government, £200m for Welsh Government and £120m for Northern Ireland Executive

The source for this report is: www.bbc.co.uk