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Budget Spring Budget 2017 Chancellor Philip Hammond gave what is alleged to be the last Spring Budget. There was very little mention of Brexit but a clear political philosophy of meritocracy - power should be invested in individuals based on ability and talent – and a first attempt to equalise the tax liabilities of employed and self-employed workers. Self–employed National Insurance Contribution (NIC) increased THE CHANCELLOR announced increases to NIC paid by the self-employed. From April 2018, the main rate of class 4 NIC for the self-employed will increase by 1% to 10%, with a further 1% increase in April 2019 to bring it more in line with Class 1 NIC for employed workers of 12%. This was no surprise based on the increase in the ‘gigeconomy’ and the number of people working on a selfemployed basis. However, later that evening faced with a Tory rebellion, the Prime Minister said that the legislation to increase NICs would not be put before the Commons until the autumn leaving the door open to further discussions. Historically, self-employed workers paid less because they did not receive the same benefits from the state as those paying Class 4 contributions. However, with the changes to state pension introduced in 2016 and the Government looking to extend other benefits to the self-employed e.g. maternity and paternity benefits this is no longer the case. Education and Skills The Chancellor plans to put technical education on an equal footing with academic studies and has introduced ‘T-levels’ – the technical version of A-levels in an attempt to address the skills shortages forecasted and exacerbated by Brexit in an effort to meet the Government’s Industrial Strategy. Business Rates The Chancellor has introduced measures to soften the increase in business rates by 1. Capping bill increases at £50 per month for businesses losing small business rate relief; 2. Setting up a £300million fund for businesses facing large increases in business rates. Mr Hammond added that the government would “have to find a better way of taxing the digital part of the economy” and that he would set out the “our preferred approach” in relation to this, “in due course”. Other • The tax-free dividend allowance often used by company directors is to be reduced from £5,000 to £2,200. • Corporation tax is to fall to 17% by 2020. • In the rest of the UK personal allowance is to increase to £11,500 and £45,000 for higher rate tax payers effective April 2017 rising to £12,500 and £50,000 by 2020. In Scotland the higher rate tax band remains at £43,000. • £350 million additional funding for Scottish Government and £120 million for Northern Ireland Executive • £200 million to encourage investment in local full-fibre broadband networks It could be argued that the Budget lacked ambition and failed to address issues such as the environment including energy efficiency. It is likely that the increase in NIC for self-employed workers will be the first of several measures to achieve tax equalisation between the employed and the self-employed. The Chancellor has stated that there will be further consultation on this matter with the Government view being that both types of worker use public services in the same way but don’t contribute to them in the same way. He believes that “choices should not be driven by differences in tax” and this is likely to open up a big debate. • 30 Spring 2017


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