The top five personal finance implications from the Spring Budget by Kreston Reeves

To help understand the first Budget from Chancellor Philip Hammond, Bryan Elkins, Partner and Head of Taxation details the five key implications for personal finances.

National insurance changes

National Insurance contributions (NIC) for the self-employed are set to increase with Class 4 NIC rising from 9% in 2017/18 to 10% in 2018/19 and to 11% a year later. Although Class 2 NIC will be abolished from 2018/19 this will only save £146 per year. Self-employed individuals with profits of £40,000 will be paying an additional £319 of Class 4 NIC in 2018/19 and £638 in 2019/20.

Childcare

A new tax-free childcare scheme giving a contribution of up to £2,000 per child (up to the age of 12) towards childcare costs was confirmed. The scheme gives basic rate tax relief on payments made into an on-line account. For every £800 paid in by claimants the government will add a further £200 up to a maximum of £2,000 per child.

The scheme is open to all working parents except where one earns more than £100,000. In addition, free childcare for three and four year olds will be extended to 30 hours per week with effect from September.

Social Care & NHS

An additional £2 billion will be made available to Local Authorities (of which half will be in 2017/18 year) to fund care packages and care services. In addition, targeted measures will be introduced to assist those authorities facing the greatest challenge. The objective is to facilitate transfer from hospitals to social care services to free up much needed hospital beds. A further £100 million will go to the NHS to invest in A&E departments to fund more on-site GP triage facilities.

Allowances

The new dividend tax-free allowance of £5,000 is to be reduced to £2,000 from 6 April 2018. The personal allowance is to be increased by more than inflation, increasing it by £500 to £11,500.

Education

The government confirmed it will invest £320m to help fund 140 free schools in addition to the 500 previously announced. 30 of these schools will open by September 2020. In addition, a new T Level will focus on technical qualifications, replacing some 13,000 vocational qualifications with a system graded like A levels.

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