Budget  

Five things your clients should know about Budget 2017

Five things your clients should know about Budget 2017

Here are five things you and your clients must be aware of and consider from Budget 2017.

1) The main rate of National Insurance contributions (NICs) for the self-employed will increase. 

Currently, the self-employed may have to pay both Class four and Class two NICs. Class four NICs at 9 per cent are paid on profits between £8,060 and £43,000. Class two NICs are paid on profits of £5,965 or more. From 2018, Class two NICs will be abolished. 

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Class four NICs will increase to 10 per cent in April 2018 and to 11 per cent in April 2019. Taken together, only a self-employed person with profits over £16,250 will have to pay more as a result of these changes. 

According to the government this better reflects the fact that the differences in contributory benefit entitlement between the self-employed and employees are now small, following the introduction of the new state pension in April 2016. In the summer, the government will also consider whether there is a case for greater consistency in parental benefits between the employed and self-employed. 

The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018. This will reduce the tax difference between the self-employed and those working through a company. Typically, general investors will need over £50,000 worth of stocks and shares outside an ISA to be affected.

2) A total of £2bn will be spent on adult social care over the next three years. 

According to the government this will help councils to provide high quality social care to more people and help to ease pressure on the NHS. A green paper on social care funding is also due later this year. 

3) Tax-free childcare will soon be available to working parents. This benefit will provide up to £2,000 a year in childcare support for each child under 12. Parents will be able to receive up to £4,000 for disabled children up to the age of 17. 

Parents of younger children will be able to apply for the scheme first, with all eligible parents able to access the scheme by the end of the year. Working parents in England will also be able to apply for an additional 15 hours of free childcare for three and four year olds, bringing the total to 30 hours a week.

4) A three-year NS&I Investment Bond with a market-leading interest rate of 2.2 per cent is set to be launched. The bond will be available for 12 months from April 2017.

The government announced the NS&I Investment Bond at Autumn Statement 2016. It will be open to everyone aged 16 and over with the flexibility to save between £100 and £3,000 over three years. 

The government also confirmed the Lifetime Isa will be available from 6 April this year. The Lifetime Isa will allow younger adults to save up to £4,000 each year and receive a bonus of up to £1,000 a year on these contributions. Funds can be withdrawn tax-free to put towards a first home or saved until a person turns 60.