Chancellor Philip Hammond delivered his 2017 Autumn Budget today. The announcement today was in the midst of Brexit uncertainty and the worsening UK economy.
In the weeks preceding the Budget, there were rumours that the chancellor would extend IR35 reforms to the private sector immediately. To the delight of many, there were no such announcements.
Key points of the budget which are specific to contractors are:
- Personal allowance will increase to £11,850 from April 2018 (UK, except Scotland)
- Higher tax threshold will increase to £46,350 from April 2018 (UK, except Scotland)
- Stamp duty to be abolished for all first-time buyers up to £300,000
- IR35 reform for private sector is not extended.
- VAT threshold stays at £85,000 and not reduced
A further analysis of the key changes:
Increased personal allowance from £11,500 to £11850 and higher tax threshold from £45,000 to £46,850 for Financial Year 2018/19
In the previous Spring Budget, the Chancellor announced Dividend allowance will be reduced from £5,000 to £2,000. The burden of this was somewhat offset by £350 increase in personal allowance and £1,850 increase in the higher tax threshold. We are still waiting for Scottish income tax rates.
Stamp Duty abolished for first time buyers
With the aim of encouraging first time buyers, Stamp Duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000. To help those in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by all first-time buyers will be exempt from stamp duty. This does not apply to Scotland.
IR35 reform not extended to Private sector
We are delighted that the chancellor has listened to contractors’ concerns and has decided not to extend this reform to the private sector immediately. He however proposed a consultation paper on this. Findings of this consultation is due to be published in 2018. We sincerely hope that he appreciates the valuable contribution they make to the UK Economy.
UK has one of the highest VAT thresholds in EU. Current UK threshold is £85,000 compared to £15,000 in Germany. Chancellor announced that he will not reduce it immediately but he will look into it in the coming two years – so do watch this space.
Tax Tables for 2017/18 – Updated
If you have any concerns or want more clarification on the Budget, please contact us.