By Chris Downing – Director.
Wednesday 8 March 2017
‘A budget fit for Brexit’ has been the theme of the build up to today’s budget with the expectation from many quarters that there would be nothing ground breaking or revolutionary contained within it. One could say that this is partly due to the fact that no one really knows the impact that Brexit will have on the economy as a whole so the Chancellor had little room for manoeuvre.
There was also a lot of attention on Business Rates to help UK businesses, but Philip Hammond was also careful not to rule out tax rises.
It should also be remembered that this is the final spring budget, with the next official Budget in October 2017 possibly giving the Government the opportunity to deal with any immediate Brexit fall out.
We have therefore put together the highlights below:
- There are temporary boosts to the finances for 2016/17, meaning debt is £16.4bn lower than forecast. However, these won’t be repeated and debt will be £58.3bn in 2017-18, £40.6bn in 2018-19, £21.4bn in 2019-20 and £20.6bn in 2020-21.
- Even by 2021 the idea of balancing the books is not going to happen.
- 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.
- Growth forecasts of 2% (up from 1.4%) for 2017, 1.6% in 2018 (lower than expected), 1.7%, 1.9% and 2% in subsequent years.
- UK second fastest growing economy in the G7.
- There is a clear drive to bring self-employed and employed individuals closer in tax terms €“ further consultation on this to come.
- The dividend tax free band of £5,000 is being reduced to just £2,000.
- NIC rates will increase for self-employed individuals. Class 4 NIC will increase by 1% per year in April 2018 and 2019.
- The controversial ‘Making Tax Digital’ proposals will be delayed for one year.
- Any spending was to be paid for by tax rises.
- £216m for schools, £300m for higher education, also introduced new T-Levels for education which should be more useful to employers.
- Starting to distribute the £23bn announced last Autumn, with money for driverless car and broadband networks.
- Fuel and tobacco unchanged.
- No amendments to UK pension limits (although these have been hit hard before).
- Special funds for Business Rates and capping the amount of increase a small business can see to £50 per month as it changes bands.
- Some give aways for International Women’s Day.
- More targeted tax avoidance rules but aimed at very niche areas.
Thank you for reading our summary, if you have any questions please get in touch.