2017 Budget Summary

Yesterday the The Rt Hon Philip Hammond MP gave us his first budget and below is our understanding of the key points:

Income tax

Possibility the change that will affect the widest audience is the personal allowance that will be increasing to £11,500 from 6 April 2017. Higher rates of Income Tax will apply once earnings reach £45,000 from 6 April 2017.

National Insurance Contributions (NICs)

Class 4 NICs will increase from 9% to 10% on 6 April 2018. Class 2 NICs will be removed from 6 April 2018.

Dividend allowance

The tax-free dividend allowance will be reduced from £5,000 to £2,000 from 6 April 2018.

Pensions – Money purchase annual allowance (MPAA)

As expected, the MPAA will reduce from £10,000 to £4,000 from 6 April 2017. The MPAA applies to individuals who have accessed their money purchase pensions using pension flexibility.

ISAs

The lifetime ISA will be available from 6 April 2017 and allows those under 40 to save up to £4,000 each year and receive a bonus of up to £1,000 a year on these contributions. These proceeds can be withdrawn tax-free to put towards a first home or when they turn 60.

It is also worth noting that the ISA limit will increase to £20,000 from 6 April 2017.

Nothing in blog should constitute advice, should you need advice, please do not hesitate to contact us.