2017 Budget highlights
In terms of tax announcements the 2017 budget is relatively bare however does continue the theme of taking aim at self employed individuals and director owner companies.
- The main rate of Class 4 National Insurance contributions to increase from current rate of 9% to 10% in April 2018 and 11% in April 2019
- The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018
- Personal tax-free allowance to rise as planned to £11,500 this year and to £12,500 by 2020
- No changes to income tax, VAT or other National Insurance categories
2016 Budget highlights
- The corporation tax rate will be reduced to 17% from April 2020.
- The Small business rates relief threshold will rise from £6,000 to £15,000 (tapered from £12,000) from April 2017 and will result in c.600,000 small businesses being excluded from paying business rates.
- A reform of Stamp Duty Land Tax on non-residential property transactions. This is expected to cut the tax for many small businesses purchasing property.
- The recent biggest change to small businesses is the new dividends allowance that was announced in the 2015 Summer budget. For more details, please see our New Dividend Tax page.
- The personal allowance will rise from £11,000 to £11,500 from April 2017.
- The higher rate threshold will increase from £43,000 to £45,000 from April 2017.
- Class 2 NIC for the self-employed will be abolished from April 2017.
- A new £1,000 ‘digital’ tax free allowance will be introduced for individuals who sell services or rent property online from April 2017.
- The recent biggest changes for individuals are the new rules regarding properties which were announced in the 2015 Summer budget. For more details, please see our Property Matters page.
- Entrepreneurs relief to be extended to long term investors in unlisted companies.
- Capital gains tax will reduce to 20% (from 28%) for higher rate taxpayers and 10% (from 18%) for basic rate taxpayers from April 2016. The reduction will not apply to residential property (i.e. buy to let) and carried interest.
- The annual ISA allowance will increase to £20,000 from £15,420 from April 2017.
- Lifetime ISA introduced – The under 40’s can save up to £4,000 a year and receive a 25% government bonus from April 2017 to save for retirement and/or to purchase their first home.
- Insurance premiums tax is set to increase by 0.05%.
- Fuel & alcohol duty are both frozen whilst tobacco tax is increased.