Mr Hammond’s light hearted delivery of his first and last Spring Budget
Statement was at initial glance low on content although will be followed up by
his inaugural Autumn Statement later this year, as long as he stays in office
and avoids repeating the fate of Chancellor Lamont, the first exponent of
attempting to banish the annual March speech to history, only to be sacked
within weeks of making the same promise!
As ever, as much is said by what is omitted and it is clear there is to be no
U-turn on the reduction in the Lifetime Allowance limit for pensions and indeed
clarification regarding reducing the annual pension investment allowance. Tax
pitfalls are increasing for the uninformed and it is important for those
affected to take action before the 5 April 2017 to apply for Individual
Protection 2014 where the value of pension assets breach £1,250,000.
As is par for the course it seems amongst Chancellors, some statements made
will not take effect in the next tax year and one important example of this
tactic was made regarding the notional tax free dividend allowance which
initially commenced at £5,000 per year from 6 April 2016 and which is to be
reduced to £2,000 per year from April 2018. Those in the medical profession
enticed by the strategy of channelling income through Limited Company structures
will see the effectiveness of this exercise quickly reduced.
Additionally, from 5 April 2017 there are other potentially significant tax
changes to those medical professionals channelling income via their private
Limited Companies. Public Sector organisations and those organisations supplying
workers to the public sector, including the NHS, will be responsible for
considering whether the contractor is effectively an “employee” and therefore
that organisation will be liable to deduct PAYE, National Insurance and possibly
pension contributions at source. It may be that some of the current locum
contracts run through personal Limited Companies will therefore no longer be
allowable. It is worth noting that GP Partnerships, for the purpose of this
legislation, will be considered Public Service bodies and therefore they will
have the responsibility to determine whether their locum doctors are essentially
employees, even if these individuals are currently “self employed” or working
via their own Limited Companies.
So in summary, a light touch budget delivered light-heartedly as the nights
become lighter. Will storm clouds build up before we reach the Autumn? “The
Budget 2017 Part II” may be a heavier read than the original.