Autumn Budget 2017

Philip Hammond delivered his Budget today after much speculation. All in all it was a pretty underwhelming budget speech and “red book”. All those rumours of immediate roll out of the public sector IR35 reforms to the private sector, reduction in VAT registration threshold, stamp duty increases and dividend tax changes all turned out to be just speculation! Overall it’s more good news than bad for contractors.

We’ve summarised some key points relevant to contractors below:

• A consultation is planned for 2018 into how IR35 compliance can be improved in the private sector. Our view is that Mr Hammond has recognised the problems that have arisen (and is probably still anticipating problems in the future) since the new off payroll rules in the public sector and realise there would be more work to do before even considering a roll out to the private sector. Let’s hope the Chancellor really does carry out the “careful consideration” that is promised and understands that the flexible workforce plays a key part in a productive Britain. With production downgraded by up to 25% over the coming years it’s even more important.
• VAT registration threshold remains at £85,000.
• Personal allowance is to be raised to £11,850 from April 2018.
• Higher rate tax threshold will be raised to £46,350 from April 2018 – this will mean another £1,350 of income before hitting higher rate tax next year.
• Stamp duty abolished for first time buyers below £300,000 – good news for anyone looking to get on the property ladder.
• Annual ISA limit frozen at £20,000 for 2018/2019. You will still be able to contribute £20,000 per year into an ISA sheltering investments and cash from tax on interest, dividends and gains.
• The tax free dividend allowance will be reduced from £5,000 to £2,000 from April 2018. This will be more than offset by the reduction in Corporation Tax to 18% and increase in higher rate band for most.

We’ll be looking over the finer detail for the rest of the day so keep an eye on our blog page tomorrow for a more in depth analysis.