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The Last Spring Budget

It only seems like yesterday that we were discussing the measures outlined in the Chancellor’s Autumn Statement and now the Spring Budget is upon us. As the Chancellor revealed last year, this is to be the last Spring Budget with budgetary announcements moving to the autumn. As such, many of the measures outlined were mere confirmations of previous announcements but the Chancellor still had plenty to talk about.

The headline news on the economy was that the UK is in a stronger position than was previously forecast. Amongst the major economies across the world only Germany grew faster than the UK in 2016, with this growth helping to deliver record numbers of people in employment, an eleven year unemployment low and a higher proportion of women in work than ever before.

Nevertheless productivity remains low and in a bid to address this, the Chancellor introduced a number of measures ranging from infrastructure, transport and research projects to funding for schools, apprenticeships and training. This last includes the introduction of T-level qualifications to support those looking to train in areas such as engineering, design and construction. The Exeter Mathematics School came in for special mention when the Chancellor announced funding for an additional 110 free schools which would include specialist maths schools which would build on the ‘clear success’ of the Exeter school.

The care system also came in for a mention with additional grant funding of two billion over the next three years, thereby enabling local authorities to put new care packages in place. A green paper examining options for funding in social care is to be issued later this year but the Chancellor took this opportunity to highlight that a death tax (much talked about recently) would not be included amongst the options.

Businesses too have received a boost with confirmation that the Chancellor intends to stick to the reductions in corporation tax which were previously announced to 19% from April this year and 17% in 2020. Other measures to support business include:

* a review of the administrative burden on R&D tax credits

* a one-year delay in the introduction of quarterly tax reporting for businesses below the VAT threshold

* three measures to help businesses affected by the rate re-evaluation exercise

When it comes to personal finances, the Chancellor confirmed that the personal allowance would rise to £11,500 and the ISA allowance to £20,000, both from April. However he also announced two measures which may adversely affect those affected.

* National Insurance. From April 2018 class 2 national insurance contributions were already to be abolished for those who are self-employed. The Chancellor has announced that from the same date the self-employed class 4 rate will rise by 1% to 10% and by a further 1% following year.

* Dividend allowance. From April 2018 the tax-free dividend allowance will reduce from £5000 to £2000. The Chancellor estimates that 50% of those affected by these changes will be shareholder directors with the rest being investors with shareholdings in excess of £50,000.

If you’re looking to create an investment portfolio, or if your situation has changed and you may therefore need to review your existing portfolio, contact Beckworth by using one of the links on our website.