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Chancellor Philip Hammond presented his first – and last – Spring Budget to the House of Commons in belligerent form.
Despite revealing upgraded forecasts from the Office for Budget Responsibility, the Chancellor announced that he would adhere to the government’s new fiscal plan, with the stated aim of preparing Britain for a ‘global future’. UK economic growth is now expected to reach 2% in 2017, before falling to 1.6% in 2018. Public sector net borrowing has been revised down to £51.7bn for 2016/17 and £58.3bn for 2017/18.
With Brexit approaching, the Chancellor announced a number of significant measures for UK businesses, including a £435m package for firms in England affected by the business rates revaluation. This will include a cap on rate rises for those losing existing business rates relief and a £300m local authority ‘hardship fund’.
As the government’s flagship Making Tax Digital initiative draws closer, there was also some good news for smaller firms, with the announcement that unincorporated businesses and landlords with turnover below the VAT registration threshold will have until 2019 to prepare for quarterly reporting.
However, a less welcome measure for the self-employed will see the main rate of Class 4 national insurance contributions (NICs) increasing to 10% in April 2018 and 11% in April 2019. Meanwhile, shareholders and directors of small private firms will see a significant reduction in the tax-free dividend allowance, which will fall from £5,000 to £2,000 in April 2018.
Keen to address the UK skills gap, the Chancellor announced the introduction of new ‘T-Levels’ for 16-19 year olds studying technical subjects from Autumn 2019, as well as funding for 110 new free schools.
The Chancellor also confirmed previously announced measures for individuals, including the introduction of the new Tax-Free Childcare scheme, a three-year NS&I Investment Bond and the new Lifetime ISA.
Alcohol duties will increase in line with inflation, while duty on tobacco will increase by 2% above RPI inflation. The main rate of the new Soft Drinks Industry Levy, or ‘sugar tax’, will be set at 18p per litre.
Under the Chancellor’s new timetable, the next Budget will be held in the autumn, followed by a Spring Statement in 2018.
For a detailed overview of the 2017 Spring Budget Report and what the measures mean for you and your business, visit our Spring Budget Report summary.
‘We are building the foundations of a stronger, fairer, more global Britain.’
Philip Hammond, Chancellor of the Exchequer
‘This was a Budget of utter complacency about the state of our economy, utter complacency about the crisis facing our public services and complacency about the reality of daily life for millions of people in this country.’
Jeremy Corbyn, Labour Party leader
‘The business communities hardest-hit by this year’s business rates revaluation will breathe a little easier thanks to the Chancellor’s decision to offer a package of transitional reliefs.’
Adam Marshall, Director General of the British Chambers of Commerce
‘There has never been a more important time for the UK to sit at the global top table of technical education for young people.’
Carolyn Fairbairn, Director General of the Confederation of British Industry
‘The Chancellor missed the opportunity to get Britain match-fit for Brexit by investing in jobs and infrastructure.’
Frances O’Grady, General Secretary of the Trades Union Congress
‘The Chancellor’s jokes may have been funnier than anybody expected, but it’ll be business leaders’ resilience that’ll be needed to ensure we’re still smiling in November.’
Stephen Martin, Director General of the Institute of Directors
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