13th March saw Chancellor Philip Hammond deliver his first Spring Statement – a miniature announcement compared to the Autumn Budget.
Here are the main points that arose from the Spring Statement:
Growth, Debt and Costs of Living:
- Growth forecast for 2018 was revised up 0.1% to 1.5%
- Borrowing for 2017/18 was revised down to £45.2 billion from £49.9 billion
- Employment in the UK has increased by 3 million since 2010 – with the unemployment rate being nearly down to its lowest in 40 years.
- Despite UK debt falling, it still remains high at around £65,000 per household.
- The Office for Budget Responsibility (OBR) is expecting inflation to fall over the next 12 months and wages to rise – good news for households who have been experiencing a squeeze in finances.
- In April 2018 the National Living Wage will rise to £7.83 per hour. National Minimum Wage for apprentices and those under 25 will also rise.
- The tax-free personal allowance will rise to £11,850 from April 2018 – and the higher rate tax threshold will increase from £45,000 to £46,350. This was announced at Autumn Budget 2017.
- The government continues to work with areas in Britain to help fund new homes as part of the investment programme it announced at Autumn Budget 2017
- London will be receiving £1.67 billion to build 27,000 more affordable homes by 2021/22
- Approximately 60,000 first-time home buyers have benefitted thus far from stamp duty being abolished for first timers purchasing homes under £300,000.
Small business and the self-employed:
There were no policy announcements in the Spring Statement – including any mention of IR35 reform in the private sector. However a few points made in the short speech will benefit small businesses and the self-employed:
- There will be a review of how late payments can be avoided. This is particularly problematic for small businesses who can’t afford to wait an unreasonable amount of time for payments from clients.
- The government will be looking at ways to extend tax relief to further support employees and the self-employed who fund their own training.
- The next business rates revaluation was pushed forward to 2021 instead of 2022 – and will be revalued every three years from that point. This helps businesses pay a more realistic rate that reflects the current rental value of properties.
Despite the relatively tame Spring Statement, there are still some things you should watch out for in the coming months. Our recent blog discussed HMRC’s consultation plans for IR35 private sector reform in the coming months. And don’t forget that the tax-free dividend allowance will be going down from £5,000 to £2,000 from 6 April 2018.
The change in the tax-free dividend allowance means that you will have to pay tax on all dividends over £2,000 that are issued on or after 6 April 2018.
Do you have tax planning questions for your limited company in the 2018/19 tax year? Our Personal Tax team can help all clients that have questions on how to efficiently run their limited company. Contact us on 01707 871610 (option 2); or request a callback.