"The decision to raise National Insurance Contributions (NICs) for the self-employed did not come as a surprise following last year’s levelling of the State Pension playing field.
"It does not make sense for one group of workers to pay a lower contribution and receive an equal benefit.
"What will be interesting is whether this increase may be a step towards using NICs to encourage saving for retirement."
Fiona Tait, Pension Specialist
Here’s our summary of the proposed changes with links to Treasury or HM Revenue and Customs documents if you would like more detail.
The personal allowance will increase to £11,500 from 6 April 2017 and the point at which the higher rate of Income Tax will apply will increase to £45,000 from 6 April 2017. Although, this will remain at £43,000 for Scottish rate taxpayers.
Class 4 NICs will increase from 9% to 10% on 6 April 2018, and to 11% on 6 April 2019. Class 2 NICs will be abolished from 6 April 2018.
The tax-free dividend allowance will be reduced from £5,000 to £2,000 from 6 April 2018.
The rate of corporation tax will reduce from 20% to 19% from 1 April 2017. It will further reduce to 17% in 2020.
This will have a marginal impact on the cost for companies providing relevant life cover for employees but the relative cost of the cover remains unchanged. This will also apply to other expenses such as pension contributions.
As expected, the MPAA will reduce from £10,000 to £4,000 from 6 April 2017. The MPAA applies to individuals who have accessed their money purchase pensions using pension flexibility.
A transfer request to a QROPS made on or after 9 March 2017 could face a tax charge of 25% on the amount transferred. The tax charge will not be deducted if at least one of the following applies:
The government is carrying out the first statutory review of state pension ages and expects to publish the results of this review by 7 May 2017.
To align with the Pensions Regulator’s new authorisation and supervision regime, the government will amend the tax registration process for master trust pension schemes. Master trust schemes will be required to demonstrate that they meet 5 key criteria:
The lifetime ISA will be available from 6 April 2017 and allows those under 40 to save up to £4,000 each year and receive a bonus of up to £1,000 a year on these contributions. These proceeds can be withdrawn tax-free to put towards a first home or when they turn 60.
In addition, the ISA limit will increase to £20,000 from 6 April 2017.
Published 8 March 2017
The information provided is based on our current understanding of the Spring Budget 2017 and associated documents and may be subject to alteration as a result of changes in legislation or practice.