Spring Budget 2017: What it means for you

Spring Budget 2017 red briefcase

Spring Budget 2017

MoneyPlus Features Team

8th March 2017 at 10:32am

There were a number of announcements today likely to affect savers, shareholders and the self-employed. Plus, we round-up the changes we already knew about.

Get our expert view on what it means for your finances – and take part in our poll to have your say.

New National Savings and Investments Bond launched

A new NS&I bond paying 2.2% over a term of 3 years on deposits of up to £3,000 will be available for 12 months from April 2017.

£5k tax-free dividend allowance cut 

The £5,000 tax-free allowance which arrived in 2016 is being cut to £2,000 from 2018.

Changes to National Insurance Contributions for the self-employed 

Class 2 National Insurance Contributions (NICs) for the self-employed will be abolished in 2018. However, Class 4 NICs will increase from 9% to 10% in April 2018 and go up to 11% the following year. 

The £5,000 tax-free allowance which arrived in 2016 is being cut to £2,000 from 2018.

And that was it from today’s Budget, and here’s a round-up of the changes which we already knew were coming in the 2017-18 tax year.

In brief: The tax changes we already knew about

Income tax allowances confirmed 

The personal tax-free allowance is going up to £11,500, with the higher-rate income tax threshold rising to £45,000. The Chancellor said the changes “will make 29 million people better off”.  

Those in Scotland will have different income tax bands.

New inheritance tax residence allowance 

When you pass on your main family home you can get an additional £100,000 on top of the £325,000 inheritance tax allowance thanks to the new main residence nil-rate band allowance. 

You can pass on £425,000 without paying inheritance tax as long as your family home is passed on to either children or grandchildren.

Saving for a first home? Lifetime ISA arrives 

If you’re under 40, a useful new savings option arrives to help you get on the property ladder. If you are a first-time house buyer, you can pay up to £4,000 a year into a Lifetime ISA and get a 25% government bonus. 

How much you can save into an ISA each year is being boosted to £20,000 – an extra £4,760 of tax-free savings.

£20k ISA allowance

How much you can save into an ISA each year is being boosted to £20,000 – an extra £4,760 of tax-free savings.

Buy-to-let tax changes 

If you have a buy-to-let, the amount of mortgage costs you can offset against rental income to assess your profits are being reduced. The reductions will be phased and will impact how much tax you may need to pay.

Money Purchase Annual Allowance cut 

If you have started to take your pension, how much you can then pay into your pension under the Money Purchase Annual Allowance (MPAA) and get tax relief is being cut from £10,000 to £4,000.

This only affects you if you have accessed your defined contribution pension.

The cut doesn’t apply if you have only taken your tax-free cash or are already in capped drawdown.

Are you ready for another Budget this Autumn?

Finally, this was the Chancellor’s last Spring Budget, which will now move to an Autumn slot, meaning there will be two Budgets this year.

This will give people more time to plan their finances for the tax year ahead.

Follow us on twitter @StandardLifeUK and Facebook  #budget2017.

The information in this blog or any response to comments should not be regarded as financial advice.  Laws and tax rules may change in the future. Standard Life is not responsible for the content of external websites.  The information here is based on our understanding in March 2017.

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