2017 Spring Budget Highlights
09 March 2017 •
Here is a review of the headline announcements made during the Chancellor’s 2017 Budget together with a reminder of the measures coming into force from April 2017, April 2018 and beyond.
Measures introduced from April 2017
As previously announced a restriction on the tax-deductibility of mortgage interest payments for private landlords will be introduced from April 2017 and is to be phased in over four tax years up to 2020/21.
The ISA limit is to increase to £20,000 from April 2017. In addition, the new Lifetime ISA is to be introduced for adults under 40 at 6 April 2017. Individuals will be able to save up to £4,000 per annum and receive a 25% bonus from the Government up to the age of 50.
Loss Relief for Companies
Trade losses generated on or after 1 April 2017 which are carried forward can be relieved more flexibly. This is by setting the losses against total taxable profits (TTP) rather than simply trade profits.
Companies and groups with profits in excess of £5million will only be able to relieve losses up to 50% of profits. This measure applies to all losses carried forward, regardless of when they arose.
Domicile and Inheritance Tax
From 6 April 2017, if a non-UK domiciled individual has been UK resident for 15 of the previous 20 tax years they will be deemed to be UK domiciled for tax purposes. In addition, individuals that were born in the UK but have acquired a domicile of choice elsewhere will also be deemed UK domiciled for all taxes whilst they reside the in the UK.
Increased Cash Basis Threshold
The turnover threshold for small unincorporated businesses to use the cash basis of accounting has been increased from £83,000 to £150,000. From 6 April 2017, the cash basis of accounting will also be available for unincorporated property businesses.
From 1 April 2017, the VAT registration threshold will increase to £85,000 from £83,000 and the deregistration threshold will rise from £81,000 to £83,000.
Measures Introduced from April 2018
In 2016 George Osborne abolished the notional tax credit for dividends in favour of a £5,000 dividend allowance within which dividends are taxed at 0%. From 1 April 2018, there will be a reduction in the dividend allowance from £5,000 to £2,000.
Class 4 NIC Increase
An increase to Class 4 National Insurance Contributions for self-employed individuals will see the current main rate rise from 9% to 10% from 6 April 2018 with a further increase from 10% to 11% planned from 6 April 2019.
In the future
Making Tax Digital (MTD) Deferral
From 6 April 2018, unincorporated businesses and landlords will be required to change the way they interact with HMRC. This includes using software and apps to record business transactions digitally and provide quarterly updates of their tax affairs. However, unincorporated business and landlords with turnover below the VAT registration threshold of £85,000 will not be required to comply with MTD until 6 April 2019.
If you would like to explore what the Spring Budget could mean for you and your business, please call 020 7731 6163 to talk to one of our tax team, you can also download our 2017/2018 tax card.