Chancellor Philip Hammond’s first, and last, Spring Budget was delivered at a pivotal moment for the UK as it readies itself to begin the process of leaving the EU. The Chancellor will announce a second Budget in the Autumn as the Treasury changes to the new financial cycle from 2018. To help you understand the Budget announcement, we have published our comprehensive presentation slides from our Budget events.

1. Thursday 9 March 2017

2. —Jennifer Williamson BSc (Hons) ACA
Accounts, Tax and Outsourcing Partner

3. Corporation tax
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• Example – Profits of £500,000
Year 2010/11… 2016/17 2017/18 2020/21
Main rate of
Corporation tax
28% 20% 19% 17%
Year 2010/11… 2016/17 2017/18 2020/21
Corporation tax £122,500 £100,000 £95,000 £85,000

4. Employers
• National living wage £7.50 from April
• £3,000 employment allowance continues
• Apprenticeship Levy from 1 April
– 0.5% charge on employers’ payroll
– Kicks in on payrolls over £3 million
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5. Levelling the playing field?
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• Increase in Class 4 NI contributions
Earnings* 2016/17
Below £8,060 0%
£8,060 - £43,000 9%
• Class 2 NIC scrapped from 5 April 2018
• Dividend Allowance reduces from £5,000 to £2,000 from 5
April 2018
Over £43,000 2% 2% 2%
2019/20
0%
11%
2018/19
0%
10%
* 16/17 tax bands shown

6. Example
Profits of £100,000
2016/17
Employee Class 1 NIC
Class 4 NIC
Class 2 NIC
Income tax
Corp tax
Company
shareholder /
director
14,570
18,400
32,970
Self employed
4,285
146
29,200
33,631
Employee
5,333
29,200
34,533

7. Example
Profits of £100,000
2019/20
Employee Class 1 NIC
Class 4 NIC
Class 2 NIC
Income tax
Corp tax
Company
shareholder /
director
15,094
17,480
32,574
Self employed
4,983
-
29,200
34,183
Employee
5,333
29,200
34,533
Class 1 NIC £12,688 - -

8. Levelling the playing field
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• Harder to get capital gains tax
treatment
• Increased penalties for borrowing money from your
company
• Personal service companies assessed to PAYE

9. Business rates
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• Small Business Rate Relief from 1 April
2017:
• 100% for rateable value < £12,000
• Tapered relief where rateable value
between £12,000 - £15,000
• However, revaluation from 1 April 2017
• Cap on rates increase for businesses losing small
business rate relief
• Local authorities fund to provide targeted relief

10. Timing is everything
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AIA Main rate Special rate
Capital Allowances £200,000 p.a. 18% 8%
• Limitless 100% relief for “environmentally beneficial” plant &
machinery – www.eca.gov.uk
• Applies to all businesses

11. Don’t forget… tax relief based on
CO2 emissions
Is your (new) car green?
- From April 18
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Emission Tax relief Full relief after
≤ 75g/km 100% 1 year
76 – 130g/km 18% WDA 15 years
Over 130g/km 8% WDA 31 years
Leased Cars
• ≤ 130g/km no restriction
• > 130g/km 15% restriction
• From 1 April 17 – additional first year RFL levy on new vehicles

12. Don’t forget… tax relief based on
CO2 emissions
Is your (new) car green?
- From April 18
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• From 1 April 17 – additional first year RFL levy on new vehicles
Emission Tax relief Full relief after
≤ 50g/km 100%(*) 1 year
51 – 110g/km 18% WDA 15 years
Over 110g/km 8% WDA 31 years
Leased Cars
• ≤ 110g/km no restriction
• > 110g/km 15% restriction

13. Research & development
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SME
Current relief 230%
Repayable credit 14.5%
• Only available to companies
• No minimum spend
• Patent Box – reduced rate of tax on profits from Patent

14. Pit stop round up
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• Corporation tax rates reducing
• Capital allowances – as you were, except on cars
• Check your state pension entitlement
• Window of opportunity to review your business rates
position
• Review your business structure

15. Clive Relf FCA
Private Client Tax Partner
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16. Personal tax - agenda
• Nuts and bolts
• Further buy-to-let change
• Two new tax free allowances
• Impact of dividend tax changes
• Inheritance tax changes
• New tax free childcare
• Pensions
• Savings update
• Making tax digital
• Pit stop roundup

17. *both subject to 8% surcharge on gains arising from residential properties
Nuts and bolts
Income tax 2016/17 2017/18 2020/21
Tax free amount £11,000 £11,500 £12,500
Basic rate band £32,000 £33,500 £37,500
Rates 20%, 40%, 45% 20%, 40%, 45% ?
Capital gains tax 2016/17 2017/18 2020/21
Exemption £11,100 £11,300 ?
Rates 10%* & 20%* 10%* & 20%* ?

18. Residential property… buy-to-lets
Tax relief restriction on finance costs for landlords
• Gradual abatement from April 2017
• Impacts higher rate taxpayers only
• Relief changes from a deduction against income to a basic
rate tax reduction
• Time to sell up? Your level of gearing could make that
decision for you

19. Residential property… an interest example
X, a higher rate taxpayer, has net rental
income of £10,000 before deducting
£4,000 of interest costs. During 2016/17
he’s taxed at 40% on £6,000 profits, with
a tax bill of £2,400.
In future:
Tax year ended Tax bill
April 2018 £2,600
April 2019 £2,800
April 2020 £3,000
April 2021 £3,200

20. Two new tax free allowances
Both coming in April 2017
Property £1,000 p.a.
• Most valuable for those with no relevant expenditure
otherwise not “pain free”
Trading £1,000 p.a.
• To cover sundry bits and bobs… again those with minimal
expenditure will benefit most

21. Further changes to dividend taxation
• £5,000 p.a dividend allowance
available since April 2016
• Historic tax credit removed
• Allowance falling to £2,000 p.a in
April 2018
Taxpayer Effective rate
basic 7.5%
higher 32.5%
additional 38.1%

22. Dividend tax example (1)
Mr Jackman, a 40% taxpayer has a
salary of £65,000 and receives
a dividend of £10,000.
The tax on this dividend would be;
Tax increase of £975 come 2018
Today From April 2018
Tax liability £1,625 £2,600

23. Dividend tax example (2)
Mrs Wilson is a basic rate taxpayer
with a pension of £12,000 and
dividend income of £10,000.
The tax on this dividend would be;
Tax increase of £225 come 2018
Today After April 2018
Tax liability £375 £600

24. Inheritance tax (IHT)
• Nil rate band of £325,000 remains
frozen until April 2021
• Unchanged since April 2009 and
IHT “take” now at all time high!
• Rate remains at 40%
• New residence nil rate band
introduced from April 2017…
…but not for everyone

25. New residence nil rate band
• Impacts deaths after 5 April 2017
• Initially worth an extra £100,000
tax free per individual in certain
circumstances
• Gradually increases to extra
£175,000 tax free over
period to April 2021
• Don’t qualify if estate on death exceeds £2 million

26. New nil rate band
The small print
• Only available where deceased
leaves their home (or cash
from earlier sale) to close
descendent
• So son, granddaughter okay
but not niece, cousin or parent
• Also not available where property left to a trust!!
• New relief is complex so caveat emptor
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27. New tax free childcare
• First announced in 2013 and being phased
in (at last) from April 2017
• Operates online and worth up to £2,000 p.a for each child
under 12 years of age
• Government contributes 20p for each 80p an individual
spends on qualifying childcare
• Available to self employed for the first time
• Parents MUST be working
• Not available if either parent has income > £100,000 p.a

28. Pensions
UNCHANGED
• Availability of tax free cash @ 25% of fund
• Tax relief available at marginal income tax rate
• Maximum annual premiums of £40,000 but restricted for HNWI
• Lifetime allowance remains at £1 million
CHANGED
• Money purchase annual allowance falls to £4,000 from £10,000 (for some)
• New 25% tax charge (from today) on transfers to QROPs

29. Savings
Lifetime ISA
• ISA allowance increasing from £15,240 p.a to £20,000 from
April 2017
• NEW lifetime ISA… for those aged > 18 and < 40
• Max saving of £4,000 p.a with Government addition at 25%
• Withdraw to buy first home OR leave alone until 60 years
of age
NS&I Bond
• New NS&I bond from April paying 2.2% gross… but only
on maximum of £3,000… 3 year lock in.

30. Making tax digital
HMRC’s goal
• To reduce the 12 million SA tax returns
submitted in 2015 to nil by 2020
The mechanics
• Introduction of quarterly reporting from
April 2018… deferred to 2019 for those
with gross incomes > £85,000 and
exemption for those < £10,000 p.a.
Things to do
• Access your personal tax account to familiarise yourself
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31. The pound in your pocket
• Duty frozen for seventh year
• Excise duty uplifted by inflation
• New sugar tax from 2018
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32. Pit stop round up
• Review your will to ensure eligibility
for new £100,000 IHT exemption
• Stress test your buy-to-let properties
• Dust off your pension pot and take advice
• Are you maxing your ISAs?
• Access your personal tax account
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