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The 10,000lb gorilla is of course the nation’s debt


Author: slg
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Home News The 10,000lb gorilla is of course the nation’s debt

The apparent consequence of yesterday’s budget will be that size of the fiscal deficit, and for that matter national debt as a proportion of GDP, end up almost exactly the same at the end of the current forecast period as was predicted in the Autumn Statement in November. There were as anyone might expect a few bit of nifty sleight of hand on presentation, but the hard number are reluctant to go away.

Crunching the numbers, the Office for Budget Responsibility finds that borrowing actually increases by £6.5bn next year, rather than shrinking as previously thought by £7.2bn. Nor is this just about differences of timing; the giveaway next year, mainly extra money for social care and the NHS, is actually quite big at £3.1bn. 

Key points

  • The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018
  • The main rate of Class 4 National Insurance contributions for self-employed individuals will increase from 9% to 10% in April 2018, and then to 11% from April 2019
  • A report is expected in the summer from the Chief Executive of the RSA addressing the wider implications of different employment practices. His preliminary findings are that choices about how people work are primarily made based on tax treatment. The Chancellor has stated that this should not be the primary driver and is looking to make the tax system fairer and more consistent
  • A relief package was announced for those most affected by the changes to business rates
  • A 25% charge will be applied to pension transfers made to qualifying recognised overseas pension schemes (QROPS), with exceptions for genuine transfer needs
  • The new three-year NS&I bond will offer a return of 2.2% a year on savings up to £3,000
  • A statutory review of State Pension age is under way with conclusions due to be published in May 2017

Known changes taking effect from April 2017

  • Extensive changes to the taxation of non-domiciled individuals including the introduction of deemed domicile status for all taxes after 15 years of residence
  • UK residential property to be subject to UK inheritance tax regardless of ownership structure
  • Phased removal of higher-rate tax relief for mortgage interest for buy-to-let investors
  • New £1,000 allowances for low-level property and trading income
  • ISA limit increased to £20,000
  • Introduction of Lifetime ISA permitting savings of up to £4,000 a year with a 25% government bonus, and which can be used to fund the purchase of a first home or be withdrawn after age 60
  • Introduction of the main residence inheritance tax nil-rate band
  • Removal of tax advantage on certain salary sacrifice arrangements such as private medical cover with some protection available for existing arrangements
  • Alignment of employer and employee National Insurance thresholds
  • Reduction in Corporation Tax rate to 19%
  • Reduction in Money Purchase Annual Allowance from £10,000 to £4,000


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