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2017 Spring Budget highlights
Chancellor Philip Hammond presented his first – and last – Spring Budget on 8 March 2017, unveiling a number of
significant measures for businesses and individuals. Here we provide an overview of some of the announcements,
together with some other recent changes.
Business rates support
package
Following the recent business rates
revaluation in England, the government
will provide further support for businesses
facing significant increases in bills. This
includes support for those firms losing Small
Business Rate Relief, to limit rates increases
to the greater of £600 or the real terms
transitional relief cap for small businesses. A
£300m ‘hardship fund’ will also be available
to local authorities in England to provide
support for individual cases.
In addition, a £1,000 business rates discount
will apply to public houses with a rateable
value of up to £100,000, subject to state
aid limits for businesses with multiple
properties, effective for one year from
1 April 2017.
Income tax measures
For 2017/18 the personal allowance has
increased to £11,500 and the basic rate
limit to £33,500 as planned. However,
for 2017/18 the Scottish government
has exercised its new income tax setting
powers and the basic rate band for Scottish
taxpayers has been set at £31,500.
The government is planning to reduce the
tax-free dividend allowance from £5,000 to
£2,000 from 6 April 2018.
National insurance
contributions
Class 2 national insurance contributions
(NICs) will be abolished from April 2018, as
previously planned.
The Chancellor also unveiled plans to
increase the main rate of Class 4 NICs
for the self-employed from 9% to 10%
with effect from 6 April 2018, and from
10% to 11% from 6 April 2019. However,
following considerable controversy over the
announcement, the Chancellor subsequently
confirmed that the government will not
proceed with the increases.
Research and development
(R&D)
The Chancellor announced that
administrative changes will be made to R&D
tax credits, with the stated aim of increasing
the certainty and simplicity around claims,
and the government will be taking action
to improve awareness of R&D tax credits
among SMEs.
Cash basis accounting
The entry and exit thresholds for cash
basis accounting increased to £150,000
and £300,000, respectively, with effect
from 6 April 2017. The government will also
simplify the rules on capital and revenue
expenditure within the cash basis, to make
it easier for businesses to work out whether
the expenditure is deductible for tax.
Vehicle Excise Duty (VED)
rates
A new VED system now applies to the
taxation of most passenger vehicles
registered on or after 1 April 2017.
For the first year this is based on CO
2
emissions. For following years, all vehicles
with zero emissions will be exempt from the
standard rate of vehicle tax, and all other
petrol or diesel vehicles will pay a standard
rate of £140 a year.
An additional rate will be added for all
new vehicles with a list price of over
£40,000 (including zero emission vehicles).
Alternative fuel vehicles continue to receive
a £10 reduction on the standard and first
year rates.
New NS&I Investment Bond
The Chancellor confirmed the rate of the
new NS&I Investment Bond, which was
announced at Autumn Statement 2016. The
Investment Guaranteed Growth Bond offers
a rate of 2.2% over a term of three years and
is available for 12 months from April 2017.
The Bond is open to everyone aged 16 and
over, subject to a minimum investment of
£100 and a maximum investment limit of
£3,000.
New Budget timetable
The Chancellor also unveiled plans to
introduce a new timetable for future
Budgets, which will see the main annual
Budget taking place in the Autumn, to
be followed by a Spring Statement. From
2018, the Office for Budget Responsibility
will produce a Spring forecast, and the
Chancellor will make his Statement
responding to that forecast.
Please note that the information in this
article was correct at the time of printing
and does not take into account any changes
following the General Election in June 2017.
For more information on the Budget
announcements and how they could
affect you and your business, please
contact us.