We know the budget delivered a couple of blows to the self employed – a stepped increase in class 4 NI – and also to company directors – with a reduction in the dividend allowance from £5,000 to £2,000.  But there was some good news regarding Making Tax Digital. This will be deferred until April 2019 for self employed individuals and landlords below the £83,000 VAT threshold. So some news for celebration!

Key points from the budget include:

Personal Taxation

The main rate of Class 4 National Insurance contributions for the self-employed to increase from 9% to 10% in April 2018 and 11% in April 2019

• The increases, applying to earnings between £8,060 and £43,000, will raise £145m a year by 2021-22 at an average cost of 60p a week to those affected. All Class 4 earnings above £43,000 will continue to be taxed at 2% while those below £8,060 will pay nothing.
• Class 2 National Insurance, a separate flat rate contribution paid by self-employed workers making a profit of more than £5,965 a year, is to be scrapped as planned in April 2018
• Taken together, millions of self-employed workers could pay an average of £240 a year more but ministers say those earning £16,250 or less will pay less
• No changes to National Insurance paid by the employed and employers or to income tax or VAT
• Personal tax-free allowance to rise as planned to £11,500 this year and to £12,500 by 2020

Business

• £435m for firms affected by increases in business rates, including £300m hardship fund for worst hit
• Pubs with rateable value of less than £100,000 to get a one-year £1,000 discount on rates they would have paid
• Rate rises for businesses losing existing relief will be capped at £50 a month
• A £820m tax avoidance clampdown, including action to stop businesses converting capital losses into trading losses and introduction of UK VAT on roaming telecoms services outside the EU
• Privately-owned SMEs to get extra year to prepare for tax digitisation and quarterly reporting
• Review of taxation of North Sea oil producers

Alcohol, tobacco, gambling and fuel

• No increases in alcohol or tobacco duties on top of those previously announced
• A new minimum excise duty on cigarettes based on a packet price of £7.35
• Tobacco will rise by 2% above Retail Price Index (RPI) inflation, with a packet of 20 cigarettes costing 35p more
• Duty on beer, cider, wine and spirits will increase in line with RPI inflation
• This will equate to 2p on a pint of beer, 1p on a pint of cider, 36p on a bottle of whisky and 32p on a bottle of gin
• Fuel duty frozen for a further year
• Vehicle excise duty rates for hauliers and the HGV Road User Levy frozen for another year

Pensions and savings

• Reduction in tax-free allowance on share dividends from £5,000 to £2,000
• The measure, affecting small business owners and investors, will come into force in April 2018, raising £2.63bn by 2021-2022
• Dividend income paid on shares held in a stocks and shares ISA will remain tax free.
• Measures to tackle abuse of overseas pension schemes