On 8 March 2017, the UK Chancellor, Philip Hammond, delivered the final Spring Budget. Practical Law’s tax team analysed the Budget in real time and delivered an in-depth legal update, which summarises the key business tax announcements.
Click here to view the legal update: Spring 2017 Budget – key business tax announcements (free to access on Practical Law)
After abolishing the Spring budget in his Autumn Statement last year, Philip Hammond made what will be his only Spring Budget speech. In keeping with the government’s plan to move to a single fiscal event taking place in the autumn, this was a relatively low-key Budget. Highlights include:
- The new restriction on corporation tax deductibility of interest will go ahead from April 2017, with relaxation of the public infrastructure exemption and a number of other changes.
- The government is to review tax reliefs aimed at encouraging investment and entrepreneurship, such as EIS and entrepreneurs’ relief, with a view to ensuring that high growth businesses have access to long-term capital.
- Non-resident companies may become subject to corporation tax on gains that are currently subject to the non-resident CGT charge. However, it is unclear whether gains on other assets will be excluded from the government’s proposals to bring non-resident companies within the scope of corporation tax.
- The tax-free allowance for dividends will reduce from £5,000 to £2,000 with effect from April 2018.
- The rate of self-employed (Class 4) NICs will increase from 9 per cent to 10 per cent in 2018-19, and to 11 per cent in 2019-20.
- The proposed reduction of the SDLT payment and filing window from 30 days to 14 days has been postponed to 2018-19.
The Chancellor took steps to strengthen tax avoidance sanctions and deterrents. He also announced three measures to tackle the hidden economy. The Government will:
- Develop proposals to make access to business services or licences dependent on tax registration and explore options to trial such conditionality through pilot activity.
- Consider the design of a failure to notify hidden economy penalty.
- Strengthen monitoring of taxpayers found to be operating in the hidden economy.
There were also key announcements on corporation tax for non-resident companies, the Making Tax Digital project, employment, a research and development tax review, and many other measure to be included in the Finance Bill 2017.
