27th March 2017 at 10:28am
The Spring Budget on 8 March saw a number of changes likely to affect savers, the self-employed and shareholders.
There was welcome news for savers with the launch of a new NS&I 3-year bond paying 2.2% on deposits of up to £3,000 from April 2017.
Then there were the proposed tax changes to cut the annual dividend tax allowance from £5,000 to £2,000 and to increase Class 4 National Insurance contributions (NICs) for the self-employed. Read more here.
We covered these and more in our MoneyPlus blog and asked you for your thoughts in our poll, with almost 350 of you replying. We’d like to thank you for taking the time to send us your comments.
Here’s what you had to say.
How did the Spring Budget affect you?
We asked whether the Budget had a positive or negative impact, or whether it didn’t really affect you.
Less than a third said it was positive, with many of those who felt it was negative going on to comment on the tax changes.
No impact: 23.03%
What you commented most on
NIC increases and the dividend allowance cut: 43.75%
Tax policy and income tax thresholds: 16.25%
Savings – ISAs and NS&I bond: 7.5%
Other (varied, including buy to let) : 27.5%
Percentage of respondents who commented.
Tax changes for the self-employed and the dividend tax cut
Tax changes were top of the agenda for many of you, particularly the proposed increase in National Insurance Contributions (Class 4 NICs) for the self-employed.
The strength of feeling around these reflected widespread public opinion which led the Chancellor to cancel the proposed change to Class 4 NICs just a week later.
“I am self-employed, I don’t get sickness pay or paid holidays. It’s totally wrong for small self-employed people having to pay an extra tax on top of the taxes we already pay,” remarked one reader from Cumbernauld.
“(…) It’s totally wrong for small self-employed people having to pay an extra tax on top of the taxes we already pay.”
Cathy from Southampton said it was “very unfair to increase NICs for [the] self-employed as they are not entitled to the same benefits as employees.”
The cut in the dividend allowance introduced in 2016 was a concern for some. “Dividend tax changes… will cost me several thousand pounds a year in additional tax.” – David
“The tax-free dividend cut compounds impact of dividend rate changes for contractors introduced in the last Budget, so another cut for the self-employed.” – Mark, West Sussex
Tax policy and thresholds
Tax policy and thresholds were a focus for almost 1 in 5 of those who commented.
“The personal allowance increases are beneficial,” noted Ricardo from Bury on the increase in the tax thresholds. The personal tax-free allowance is rising to £11,500, with the higher-rate income tax threshold going up to £45,000. (Scotland will have different income tax bands.)
“I want to see a rise in the annual pension amount [annual allowance] and the £150k tax limit for income. They should both rise in line with income and the lower bands,” was one anonymous comment.
Savings and ISAs
“Good to see ISA changes to promote [the] savings habit,” noted Harshal from Bristol, with a Mr Davis from Tyne and Wear adding, “the new NS&I Bond is interesting but only £3k deposits don’t make for [a] big interest pay-out.”
The increase in the annual ISA savings allowance to £20,000 was welcomed by Charles from Broxburn, among others – “improvement for savers up to £20,000 is good”.
Then there’s Brexit…
Others wanted to comment on wider issues such as Brexit and buy to let.
“The Autumn budget will have more impact as we move into a new era after Article 50 has been invoked,” noted Peter from Newcastle under Lyme.
“The Autumn budget will have more impact as we move into a new era after Article 50 has been invoked,”
Commenting on the changes to buy to let taxation announced previously, Sarah from Ilford stated “small time buy-to-let investors like myself will have to pay more tax”.
That was the Spring Budget, here’s to the next one this year
So that was the feedback on the Spring Budget 2017. Given that it was a relatively quiet Budget when it comes to finances, it’s possible the Autumn Budget – the second this year as the Budget moves to a new timetable – could have more changes likely to affect your finances in 2018.
As ever, we’ll be covering them in MoneyPlus.
Information correct in March 2017. Views and opinions expressed are from those who replied to our poll and don’t necessarily reflect our own views.