Budget 2017: winners and losers revealed
We round-up the winners and losers from the chancellor Philip Hammond’s first and last Spring Budget.
It was predicted this year’s Budget would be a rather dull affair, with little in the way of surprises. This played out as expected, with chancellor Phillip Hammond refraining from pulling any metaphorical rabbits out of hats; but there were a couple of unexpected announcements.
Here Money Observer rounds-up the winners and losers, explaining how various measures will impact your wallet.
According to the Office for Budget Responsibility, the UK economy will remain robust from now until 2021, with growth expected to come in at 2 per cent this year, an increase from last November’s forecast of 1.4 per cent.
Free childcare will be extended to working families with children under 12 in England, providing up to £2,000 a year to help with childcare costs. From September 2017, this free childcare offer will double, from 15 to 30 hours a week for families with three and four year olds.
A crackdown on misleading consumer practices, including those which end up costing people money they aren’t expecting, was announced.
To help people make better-informed choices about how they spend their hard earned cash, the Chancellor Philip Hammond highlighted some of the details in the government’s upcoming Consumer Green Paper. The paper, to be set out by the Secretary of State for Business, Energy and Industrial Strategy Greg Clark in the coming months, will closely examine markets which are not working fairly for consumers and reveal how the government intends to help, including the end of subscription traps.
Measures were announced to help small businesses deal with changes to businesses rates. Hammond proposed a £50 monthly cap for businesses that will lose their rate relief, while 90 per cent of pubs will receive a £1,000 discount.
The self employed
Self-employed workers have been hit with higher taxes, in the form of higher national insurance contributions. Those who have set up their own small company and pay themselves dividends rather than a salary because of the preferential tax rates are also affected by the cut in dividend allowance (below).
Director shareholders and large income investors
The dividend tax allowance will be cut from £5,000 to £2,000 in April 2018. While 80 per cent of investors are not expected to pay tax under the dividend regime, those with sizeable investments outside of an Isa, typically £50,000 or more, are likely to be caught by the allowance change, as are shareholder directors who pay themselves in dividends from their company.
For some individuals who request an overseas pension transfer on or after 9 March 2017, the government will introduce a 25 per cent charge on transfers to Qualifying Recognised Overseas Pension Schemes (Qrops). This charge is targeted at those seeking to reduce the tax payable by moving their pension wealth to another jurisdiction.
The government confirmed the new National Savings and Investments (NS&I) bond, which will have a three-year term, will offer an interest rate of 2.2 per cent on up to £3,000. But the rate undershoots the Office for Budget Responsibility (OBR) inflation prediction of 2.4 per cent in 2017. Savers who invest the full amount will pocket £66 a year before tax.