The Chancellor promised that he would deliver a ‘light’ Budget and he kept his promise, with relatively few tax changes compared to prior years. The key tax changes announced are summarised below.
While there were very few headline-grabbing announcements, the one that has drawn significant interest is an increase in class 4 national insurance contributions by 1% from April 2018 and a further 1% in April 2019. This will increase class 4 national insurance from the current 9% to 10% from April 2018 and to 11% from April 2019. The justification for this is that unlike in the past, self-employed individuals are now entitled to the same state pension benefits as employees and so the playing field needs to be levelled so that both employees and self-employed individuals are taxed in the same way. Employees currently pay a main rate of national insurance of 12% and the government’s aim is to align self-employed national insurance contributions with this. The Budget announced an increase to 11% in April 2019 but it wouldn’t surprise us if a further 1% increase to 12% is introduced in the following year so that the rate is exactly aligned with employee national insurance contributions.Continue reading