MAY JUN 17

T A X
CHANCELLOR SCRAPS BUDGET PLAN TO
INCREASE NICS FOR SELF-EMPLOYED
Chancellor Philip Hammond has
announced that the government will
not now proceed with the increase in
Class 4 national insurance
contributions (NICs) proposed in his
Spring Budget
The change would have increased
Class 4 NICs from 9% to 10% in April
2018, and to 11% in 2019 ? with the
stated aim of bringing the
contributions paid by the
self-employed closer to the 12%
currently paid by employees.
However, the Budget proposal
prompted an angry reaction ? including
from some Conservative MPs ? as it
appeared to contradict the 2015
Conservative election manifesto
promise not to increase certain taxes,
including national insurance.
In a letter explaining the U-turn, the
Chancellor wrote: ?It is very important
both to me and to the Prime Minister
that we are compliant not just with the
letter, but also the spirit of the
commitments that were made.
?In the light of what has emerged as a
clear view among colleagues and a
significant section of the public, I have
decided not to proceed with the Class
4 NIC measure set out in the Budget.?
The majority of business groups have
welcomed the U-turn. Adam Marshall,
Director General of the British
Chambers of Commerce (BCC),
commented: ?The NICs rise, together
with the cut to dividend tax-free
allowances, was not viewed favourably
by entrepreneurs ? so this move and
pause for thought are welcome.?
The Federation of Small Businesses
(FSB), which lobbied against the NICs
rise, gave a broadly positive response.
Mike Cherry, its National Chairman,
stated: ?We are delighted for our
members and all the nation?s
self-employed that the Chancellor has
recognised the strong opposition to
this measure, admitting it was against
the spirit of the manifesto on which his
party stood, and has now decided to
scrap it for the duration of this
parliament.?
Responding to the news, the Trades
Union Congress (TUC) called for the
Chancellor to now ?look at how
self-employed workers can be treated
more fairly?.
Frances O?Grady, General Secretary of
the TUC, said: ?People who are
self-employed should be able to access
basic protections like any other worker.
That means paid parental leave and
pay when you fall sick.
FINAL SPRING BUDGET SETS THE STAGE FOR
'BRITAIN'S GLOBAL FUTURE'
Chancellor Philip Hammond presented
his first - and last - Spring Budget to
the House of Commons in belligerent
form.
Despite revealing upgraded forecasts
from the Office for Budget
Responsibility, the Chancellor
announced that he would adhere to
the government's new fiscal plan, with
the stated aim of preparing Britain for
a 'global future'. UK economic growth
is now expected to reach 2% in 2017,
before falling to 1.6% in 2018. Public
sector net borrowing has been revised
down to £51.7bn for 2016/17 and
£58.3bn for 2017/18.
With Brexit approaching, the
Chancellor announced a number of
significant measures for UK
businesses. These include a £435m
package for firms in England affected
21.
by the business rates revaluation, with
a cap on rate rises for those losing
existing business rates relief and a
£300m local authority 'hardship fund'.
As the government's flagship Making
Tax Digital initiative draws closer, there
was also some good news for smaller
firms, with the announcement that
unincorporated businesses and
landlords with turnover below the VAT
registration threshold will have until
2019 to prepare for quarterly
reporting.
However, a less welcome measure for
shareholders and directors of small
private firms will see a significant
reduction in the tax-free dividend
allowance, which will fall from £5,000
to £2,000 in April 2018.
Keen to address the UK skills gap, the
Chancellor announced the introduction
of new 'T-Levels' for 16-19 year olds
studying technical subjects from
Autumn 2019, as well as funding for
110 new free schools.
The Chancellor also confirmed
previously announced measures for
individuals, including the introduction
of the new Tax-Free Childcare scheme,
a three-year NS&I Investment Bond
and the new Lifetime ISA.
Alcohol duties will increase in line with
inflation, while duty on tobacco will
increase by 2% above RPI inflation. The
main rate of the new Soft Drinks
Industry Levy, or 'sugar tax', will be set
at 18p per litre.
Under the Chancellor's new timetable,
the next Budget will be held in the
autumn, followed by a Spring
Statement in 2018.