08 March 2017
Budget: Spring 2017
Philip Hammond has announced tax rises for the self-employed, a clampdown on tax avoidance and a cut in corporation tax as part of his first Budget as Chancellor of the Exchequer today.
Under reforms unveiled on Wednesday, Mr Hammond has pledged to clamp down on tax avoidance, which will total £820 million. This will include action to stop businesses converting capital losses into trading losses, tackle abuse of foreign pension schemes and introduce UK VAT on roaming telecoms services outside the EU.
Meanwhile, corporation tax will drop to 19% next month and will fall again to 17% by 2020, the Chancellor has confirmed.
Self-employed workers will see NI contributions increase by 1% to 10% from April next year and a further 1% the following year. Mr Hammond told MPs the difference between NI contributions of employed and self-employed workers could no longer be justified.
The move is expected to raise £145 million a year by 2021/22.
Mike Cherry, chairman of the Federation of Small Businesses, said: "The National Insurance rise should be seen for what it is - a £1 billion tax hike on those who set themselves up in business.
"This undermines the Government's own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business."
However, Torsten Bell, director of the Resolution Foundation, says people in this category will actually end up in a better position.
The expert said: "By abolishing Class 2 NICs and staggering the increase in Class 4 NICs, most self-employed workers will actually be better off next year, with higher paid accountants and management consultants taking the biggest hit."
Other key points from the 2017 Budget include:
- A package totalling £435 million will assist businesses affected by business rate rises, including a £1,000 discount for most pubs.
- Firms that fall below the VAT registration threshold can delay introducing quarterly reporting by one year.
- The tax-free dividend allowance is to be reduced from £5,000 to £2,000 from April 2018.
- A commitment to increasing income tax thresholds to £12,500 for the basic rate and £50,000 for the higher rate will be in place before the end of this Parliament, the Chancellor confirmed.
- Funding of £5 million will be invested to support people returning to work after a career break.
- From a previously announced infrastructure and innovation fund, Mr Hammond pledged £300 million to support 1,000 new PhD places and fellowships in STEM subjects.
- £270 million has been allocated towards new technologies like robots and driverless vehicles.
- £16 million has been promised for 5G mobile technology.