Philip Hammond delivered his last (and first) Spring Budget in a somewhat sprightly mood with sharp quips and targeted jibes at the opposition aplenty. Perhaps his knowledge that there were no surprises in store (good or bad) put him in a relaxed mood and coupled with a fairly optimistic set of economic forecasts, the overall speech was largely upbeat.
2017/18 tax rates and allowances
Companies can be encouraged that the reduction in the main rate of corporation tax to 17% from 2020 was re-affirmed. In addition, there was an announcement to encourage investment in research and development by simplifying the somewhat complex set of rules for the large company Research and Development Expenditure Credit and improve awareness of the small company regime amongst SMEs. Both regimes offer repayable tax credits to companies, so simplification is welcome.
If there is one itch that this chancellor, like previous chancellors, continues to scratch it’s the one of employed versus self employed.
Keen to prove his mettle, Mr Hammond has raised Class 4 NICs for the self employed from 9% to 11% by April 2019. Notably, still 1% below the 12% employees pay and of course no employer NIC equivalent. Perhaps watch this space for future budgets.
But the continued gripe is the perception that an individual can claim to be self-employed and pay less tax, yet enjoy the status and benefits of an employee. The chancellor has asked Matthew Taylor, the Chief Executive of the RSA to ‘consider the wider implications of different employment practices.’ We await his output, which is due in the Summer.
Finally, for the first time in (what appears to be) a long time, there was no further tax raising measures targeted at property owners and investors. The OBR is forecasting a slowdown in house price growth to around 4.5% pa over the next few years, so perhaps the Chancellor sees the heat may have gone out of the property market, although many were hoping for further support for first time buyers.
If you have any questions about the changes and how they affect you, please do get in touch.