Here are 5 ways Chancellor Philip Hammond’s first budget has a direct impact on your finances:
1. Millions of freelancers and contractors are hit
The rate of National Insurance self employed people will have to pay will rise by 1% to 10% from April 2018, and a further 1% the following year – a big blow for the booming freelance and entrepreneurial sector.
2 Savers get some help
As previously announced, the amount of savings you can shield from tax each year in an Individual Savings Account is set to rise to £20,000 in the new tax year.
The Government is also set to launch an NS&I Savings Bond in April that will pay an interest rate of 2.2% for a maximum investment of £3,000.
A new Life Time ISA (LISA) will be made available to under 40 year olds – with the Government offering to top it up by 25% on any savings up to a maximum of £1,000 a year.
3. Investors are hit
The level of tax-free dividends you can earn from investments and companies has been slashed from £5,000 to £2,000 from April 2018.
4. Important tax changes for workers confirmed
As expected the first £11,500 you earn in a tax year will be income tax free from April – a rise of £500. This will increase annually to £12,500 by 2020.
The amount you earn before you face a higher rate of income tax rises from £43,000 to £45,000 from April and to £50,000 as planned by 2020.
The National Living Wage will rise to £7.50 in April, again as expected.
5. Small business rates chaos continues – but with some emergency help
The Government has been forced to acknowledge that upcoming Business Rate revaluations will penalise many small business owners with huge hikes in costs overnight from this April.
So the Chancellor was forced to backtrack furiously and announce that:
– Any business that was set to lose their rate relief will see their increases capped at £50 a month.
– A £300 million discretionary fund will be set aside to help hard hit businesses.
– Pubs with a rateable value of less than £100,000 will get a £1,000 discount in the new tax year.
On the plus side Corporation Tax is still set to fall to 17% by 2020.
…and as per the pattern of most recent budgets driving a car, going on holiday, drinking and smoking are all likely to get a bit more expensive due to incremental tax rises…