Sponsored content: What does the 2017 budget mean to Suffolk taxpayers?
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Following the uncertainty over Brexit and even the Trump elections, today the nation will be looking to Chancellor of the Exchequer Philip Hammond to offer some reassurance and stability.
As he delivers his spring budget, the business world will be hoping for robust policies that will help them better plan for the months and years ahead, while tax payers will be expecting policies that encourage them to continue saving for their own long-term financial stability.
Will we get this? Keith Senior, a director of Jacobs Allen Chartered Accountants and Chartered Tax Advisers, gives us his predictions.
Change in stance over pension investment
As we have seen in recent months, the Government are doing more to encourage alternative forms of saving for the future, such as the lifetime ISA. Mr Senior said: “The lifetime ISA comes into operation in April and I expect we will see a move to focus attention on saving for retirement using an ISA rather than saving in a pension because that provides more limited access to tax relief on savings.”
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Tax and national insurance changes for the self employed
Traditionally there has been a disparity in the level of tax paid by those who are self employed and those who are employees, and this is something the Government has been trying to address.
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“There was a 25% increase last year in self employment rates, it is a growing sector and the Government want to make sure those who are self employed pay the same level of tax as those who are employed.”
He has predicted a rise in national insurance rates for self employed workers to bring them more in line with other workers.
However, a more costly change for those who are self employed could also be on the way. There is already legislation in place and effective from April 2017 whereby public sector bodies who use contractors operating through personal service companies have to decide if those contractors are effectively employees or retain their self employed status.
“The chancellor could announce that this will be rolled out to all companies who use contractors in say 2018.”
If it is deemed that their contract status is effectively that of an employee, tax and NI contributions will need to be deducted at the point of payment by the end client rather than by the contractor’s own company.
Digital tax plans delay
There have been consultations on the Government’s Making Tax Digital plan, due to be introduced in 2018.
“Anyone who earns £10,000 or more from untaxed sources will have to apply the making tax digital procedure.
“However, the Government is yet to work out how the system will work, especially for those who are not digitally savvy.
“We might see, in the Budget, that they delay it until 2020.”
He believes this will help reassure businesses who are looking for more clarity and stability as we move towards Brexit.
Increase in death levy to offset losses from inheritance tax relief
Over the next four years, starting in April, there will be a gradual increase in the residential nil rate band applied to the estates of individuals who leave a property that was their main residence to their children or grandchildren. This will become a valuable relief for those with estates worth up to £2m, at which point the relief will start to be withdrawn.
“The cost of this could be over £1.5bn to this Government,” warned Mr Senior.
To counter the cost pf this relief, he expects we could see the Chancellor announce an increase in the level of tax paid on a person’s death, either increasing the rate of inheritance tax generally or applying a ‘death levy’ on the value of a deceased person’s estate.
For personalised advice on how any changes could affect you, contact Jacobs Allen, based in Bury St Edmunds and Haverhill.