Employee, For employees, For employers

Spring Budget 2017: A summary

The upheaval surrounding the Autumn Statement suggested that its spring counterpart might be equally dramatic. However, it seems that businesses can breathe a sigh of relief, as the changes that will impact employers and the workforce in general are minimal.

For those of you who gave up 20 minutes into a desk-side viewing, we have summarised the changes relevant to businesses into a digestible few points- enough to keep you well informed but not enough to send you to sleep.

The Chancellor began his speech on a positive note, discussing the UK workforce. “Employment is at a record high. Unemployment is at an 11 year low, with over 2.7 million more people enjoying the security and dignity of work than in 2010. A far cry from the 3 million unemployed predicted.

“And I am pleased to report, on International Women’s Day, that there is now a higher proportion of women in work than ever before.”

Sounds pretty good to us!

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Changes to National Living Wage

As previously announced, the Chancellor highlighted that national living wage will rise again to £7.50 in April, equating to over £500 more for a full-time worker than this year, and £1,400 more than when the National Living Wage was introduced.

  • The personal allowance will rise for the seventh year in a row to £11,500 (helping a whopping 29 million people)

Tax-free childcare

The scheme will be rolled out to all eligible parents by the end of the year and will be worth approximately £5,000 a year to a young family with a three year old and both parents working.

  • Eligible working parents will be able to receive up to £2000 a year towards the cost of childcare for each child under 12
  • Come September, the free childcare entitlement will be doubled to 30 hours a week

“These childcare measures represent a further huge step forward in support for ordinary working families, and for women in the workplace.” – Hammond

ISA and pension

The government will increase the ISA limit from £15,240 to £20,000 in April 2017.

  • From 6 April, savers will be able to put up to £4,000 a year into a Lifetime Individual Savings Account (LISA), which will be topped up with a 25% government ‘bonus’, making a maximum of £5,000 saved each year.
  • The LISA will be available for those under the age of 40 and can be used for buying a first home or put towards their retirement.

Tax

There are now nearly 5 million self employed people in the UK, meaning that the Government earns less than they should be earning in taxes.

  • In April 2018, Class 2 NIC will be abolished
  • The main rate of Class 4 NICs for the self-employed will increase by 1% to 10% and then again to 11% in April 2019

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Business rates

It is essential that the corporate tax regime does not encourage people across the economy to form companies simply to reduce tax liabilities.

  • The tax-free dividend allowance will increase from £5,000 to £2,000 with effect from April 2018

 

 

* Photo credit: ITV

- By Hannah Sims, editor at Perkbox.

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