Spring Budget 2017
This week the Chancellor delivered his first and last Spring Budget. From now on, Budgets will be delivered in the autumn, with the first one taking place in autumn 2017.
The Budget itself was very quiet in relation to financial planning with prior notice of changes to National Insurance contributions for the self-employed and a reduction in the dividend tax allowance being the key points.
Below we have summarised the key changes of most relevance to financial planning, some of which take effect from April 2017. A large number of these areas had already been announced before the Spring Budget. Bear in mind that until passed into legislation, there is still the potential for change.
Important Note: The content of this blog would have been more interesting if Larry the Cat had presented the budget!
Key Changes
- Income tax personal allowance will increase to £11,500 from April, to rise again to £12,500 by 2020 (as planned). The higher rate threshold will rise to £45,000.
- National Insurance contributions for the self-employed will increase by 1 percent to 10 percent in April 2018, to rise a further 1 percent in April 2019 (estimated to cost an average of 60p per self-employed person per week).
- The tax-free dividend allowance will reduce from £5,000 to £2,000, effective from April 2018 (this will affect all those with investment dividend income).
- The annual ISA allowance will increase to £20,000 from this April. All types of ISA subscription use up part of this limit (except Junior ISA (JISA) subscriptions).
- The JISA allowance will increase by CPI to £4,128.
- Lifetime ISA (LISA) The Lifetime ISA will be available from 6th April this year. The Lifetime ISA will allow younger adults to save up to £4,000 each year and receive a bonus of up to £1,000 a year on these contributions. Funds can be withdrawn tax-free to put towards a first home or saved until a person turns 60.
- A new savings bond will be available through National Savings & Investment (NS&I) from April 2017. This will have an interest rate of 2.2% gross, and a term of three years. Savers over the age of 16 will be able to deposit a minimum of £100 maximum of £3,000. This will be available for 12 months.
- Corporation tax will fall to 19% for the years starting the 1st April 2017, 2018 and 2019 17% by 2020, as planned.
- There will be an £2 billion for adult social care over the next three years to help councils to provide high quality social care to more people and help to ease pressure on the NHS.
Magenta is happy to discuss any of the above in further detail with you, please do not hesitate to contact us.
Tax and Estate Planning Services are not regulated by the Financial Conduct Authority.
This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice as at 10.03.2017. You are recommended to seek competent professional advice before taking any action.