The 2017 Budget – what’s in it for you?

Judy Armstrong


2 min read

This year’s Budget speech held no big surprises for savers and investors, but included a few tax changes affecting the self-employed and director shareholders.

Two engineers working seen through equipment

Against a backdrop of a stronger-than-expected economy, Chancellor Hammond used his first Budget, announced on 8th March 2017, to set the scene for a ‘post-Brexit’ Britain.

Here’s our summary of the key points.

Self-employed to face increased NICs

As part of the government’s efforts to create “a fair and sustainable tax system”, class 4 national insurance contributions will increase from 1% to 10% from April 2018. A further 1% increase will follow in 2019.

While this will help reduce the gap in taxes paid by those employees and the self-employed effectively performing the same duties, it does mean the self-employed may need to consider the structure of their personal finances, pensions in particular.

Tax-free dividend allowance to be cut

Similarly, to address the even larger tax gap between employees and those performing similar duties through limited companies, the tax-free dividend allowance will be reduced from £5,000 to £2,000 as of April 2018.

This change to the dividend allowance, while not great news for directors and shareholders, could make the stocks and shares ISA more attractive as it continues to shelter dividends earned within it.

New NS&I ‘investment’ bond confirmed

As promised in last year’s Autumn Statement, the Chancellor today confirmed that the new three-year government-backed NS&I ‘investment bond’ would launch this April.

Designed to support savers disappointed by low interest rates, the investment bond will offer a 2.2% AER interest rate for three years. As there will be a £3,000 contribution limit, savers will earn a maximum of £66 interest per year.

Other points of interest

  • As planned, the personal allowance will increase to £11,500 in the new tax year
  • The national living wage is rising to £7.50 an hour from April
  • Social care will receive an extra £2bn over the next three years
  • Children on free school meals at selective schools will now receive free school transport
  • The sugar tax will be set at between 18p and 24p per litre, with the proceeds going to fund sports for children
  • £270m will go towards new technologies, including driverless vehicles and robots
  • No further increases were made to alcohol and tobacco duties

You can read the Chancellor’s full Budget speech here.

Risk warning: As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. ISA rules apply.  Tax treatment depends on your individual circumstances and may be subject to change in the future.

 

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Judy Armstrong

Judy, Nutmeg’s content manager, writes on a variety of financial and lifestyle topics for Nutmegonomics.


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