Today’s Budget announcement started at 12:30 and was the first Budget delivered by the Chancellor, Phillip Hammond. Apart from the economic predictions, several points will affect doctors and dentists. Here we summarise.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
Key points of the Budget 2017 for Doctors & Dentists
Economic growth forecasts
It has been emerging over the past few months that the UK economy hasn’t performed as bad as expected following the EU Referendum.
To this extent, the Chancellor was able to give some good news regarding the new predictions on economic growth.
Figures now suggest:
YEAR | WAS | NOW |
2017 | 1.4% | 2.% |
2018 | 1.7% | 1.6% |
2019 | 2.1% | 1.7% |
2020 | 2.1% | 1.9% |
2021 | 2.0% | 2.0% |
However, political experts comment that the true effects of Brexit are yet to be felt.
Borrowing
Hopes of a surplus by the end of this decade have been abandoned.
Figures now suggest:
YEAR | WAS | NOW |
2017-2018 | £59 billion | £58.3 billion |
2018-2019 | £46.5 billion | £40.8 billion |
2019-2020 | £22 billion | £21.4 billion |
2020-2021 | £21 billion | 20.6 billion |
2021-2022 | £17.2 billion | 16.8 billion |
Hammond indicated that this won’t be a reason to ease off on austerity measures, or spend more.
£435 million to help ease Business Rates (for some)
Understandably, Hammond needed to respond to the backlash following changes to business rates.
His solution, for now, is three-fold:
- A cap for small businesses so that rates rise by no more than £50 per month
- Pubs to get a £1,000 discount where their rateable value is under £100,000. This includes 90% of pubs.
- £300 million fund for local authorities to act with discretion to help local businesses.
More to clamp down on tax avoidance
Hammond has allocated £820 million in tax avoidance measures, including:
- VAT on roaming telecoms outside the EU.
- New financial penalties for professionals, i.e. accountants, who create schemes defeated by HMRC.
- Measures to stop businesses converting capital losses into trading losses.
Claiming tax back from the self-employed
The Chancellor took some time to explain the need to further level the playing field between the self-employed and employed when it comes to the tax they pay.
It is likely this change will be seen by many as simply a further assault on entrepreneurialism.
National Insurance for self-employed will increase by 1% in 2018 and a further 1% in 2019.
The Treasury is expected to reap £145 million from this change.
Tax-free dividend allowance to reduce from 2018
The Chancellor announced a £3,000 drop in the tax-free dividend allowance that was introduced just last year.
The allowance will be just £2,000 from April 2018.
This could also be seen as a further attack on shareholders that currently gain tax advantages from taking dividends through a limited company, over a salary.
Personal tax allowance
Opportunity for savers
As promised, there will be a three-year bond available from April 2017, paying 2.2% on savings up to £3,000.
This is to appease the pitiful savings rates of late and give a welcomed break to those that choose to invest in low-risk savings accounts.