Chancellor Philip Hammond delivered his first Budget, and the last to be held in the spring, on 8 March. While politicians and commentators gave their views on his performance, what does the Westminster Spring Budget actually mean to you as a private individual? The main outcomes are summarised below.
Personal Tax-Free Allowance
For basic rate taxpayers in England & Wales, there's to be a rise in the personal tax-free allowance from £11,000 to £11,500 this year, with further rises to £12,500 by 2020. Scottish rates are set by the Scottish Parliament and for 2017/18 the personal allowance will also be £11,500.
Higher Rate Threshold - Scottish higher rate taxpayers pay more
The higher rate threshold for Scotland, however, will be lower than the rest of the UK at £43,000 (elsewhere in the UK the threshold will be £45,000.
This means that for the first time, Scottish higher rate taxpayers will be paying £400 more tax than the rest of the UK, and Scottish taxpayers will fall into the higher rate bracket earlier than those in the rest of the UK.
Tax-Free Dividend Allowance
Shareholders are to see a reduction in their tax-free dividend allowance. The allowance is to be reduced from £5,000 to £2,000 with effect from April 2018 which will primarily affect shareholders of small companies and those with larger share portfolios. With the ISA allowance being increased to £20,000 with effect from April this year, however, careful planning should be able to help offset the reduction in the dividend allowance.
National Savings & Investment Bonds
The Chancellor confirmed the announcement made in the Autumn Statement that there will soon be a new government-backed savings product available.
Investment Guaranteed Growth Bonds will be offered by National Savings & Investments with effect from April, paying interest of 2.2%. Interest on the Bonds will be paid without any tax deduction and will count towards the personal savings allowance, which allows basic-rate taxpayers to earn £1,000 in interest tax-free. The Bond will be available to those aged 16 and over, with a minimum investment of £100 and a maximum of £3,000. The savings will be locked in for three years.
The good (or bad) news is that there are no changes being made to Income Tax, Capital Gains Tax, Inheritance Tax, VAT nor National Insurance contributions for employees.
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