Philip Hammond has just delivered ‘the last spring budget’. From a taxation perspective, there was nothing of tremendous significance referred to in his speech. These were the ‘highlights’ from our perspective;
- Businesses with turnover below the VAT threshold have been given one more year before they have to comply with the Making Tax Digital requirements, deferring the start point until at least April 2019. It would still appear to be the case that only those with turnover below £10,000 will be exempt.
- The Chancellor significantly did not announce any immediate increases in the rates of tax and NIC – the announced changes will be implemented from April 2018.
- National insurance rates for the self employed will be increased by 1% in 2018/19, with a further 1% increase to follow in 2019/10. Class 2 NIC will be abolished from April 2018.
- The new Dividend Allowance will be reduced from £5,000 to £2,000 from April 2018, costing higher rate taxpayers £975 a year and basic rate taxpayers £225 a year.
- Further measures will be announced aimed to encourage further research and development. The chancellor hinted at simplifying the way tax relief can be claimed by companies.
- The Chancellor commented on the disparity between business rates paid by reference to bricks and mortar to businesses that operate online. Perhaps businesses that sell online should expect some redress in the near future.
Various changes have already been announced that will be implemented from April 2017 which could be more relevant to current tax planning. Of particular note for landlords is that tax relief on borrowing costs is to be restricted from April 2017.
Also, individuals with income exceeding £110,000 who make substantial pension contributions may wish to review whether they have surplus entitlement from 2013/14 which can either be used by 5 April 2017 or forever lost.
No doubt more will emerge from the supporting report, which we will comment on later.
We would be pleased to discuss any tax related matter with you, so please get in touch should you have any queries.