- March 8, 2017
- Posted by: Gary Parsons
- Category: Pay, Reward & Benefits
Chancellor Philip Hammond has today (8 March 2017) made his first budget speech, which was anticipated to be rather plain and it had been suggested to contain “no spending sprees”.
UPDATED 15/03: Plans to increase National Insurance levels for self-employed people – announced in the Budget last week – have been dropped. Chancellor Philip Hammond has said the government will not proceed with the increases which were criticised for breaking a 2015 manifesto pledge. In a letter to Tory MPs, he said: “There will be no increases in… rates in this Parliament.”
Read the summary below to see how it affected you and your employees:
‘National living wage’
As expected, the Mr Hammond reiterated the rise of the National Living Wage to £7.50 per hour in April and many analysts feel that unfortunately it’s expected to be too low to meet the government’s target of £9.00 per hour by 2020.
It was announced that £820m would be spent to tackle tax avoidance.
Tax-free dividend allowance
Following cuts announced last year, in April 2018 we will see a further cut to £2,000 from the current £5,000 allowance given.
This will impact directors who rely on dividends rather than salaries, particularly those who are running small businesses and pay themselves a pre-threshold salary each month.
Personal tax allowances
As expected, the allowance was confirmed to rise to £11,500 for basic taxpayers.
Mr Hammond had to go into a very lengthy explanation to justify the grounds to improve fairness in tax levels between those that choose employed and self-employed status’.
Less tax will be paid by self-employed people and ultimately cost the taxpayer £5bn this year alone. In turn, the Treasury will raise £145m from increasing national insurance contributions of some self-employed people.
>> See the above update for the latest on Self-Employed National Insurance.
The next budget is expected to take place in the Autumn, however many critics are anticipating announcements ahead of this.
For full details on other parts of the Spring Budget see below:
— HM Treasury (@hmtreasury) March 8, 2017
Last Updated on 3 months by Gary Parsons