From the next tax-year (April 2018) there will be changes in the personal income tax-free threshold at £11,850 from £11,500 and the higher rate of tax threshold from £45,000 to £46,350 next year. This budget measure has been taken to show consistency in keeping the 2020 Conservative manifesto that these rates will be increased to 12,500 and 50,000 respectively. No changes were made to tax reliefs for pension contributions and the self-employed tax situation, despite the previous amendments and the following U-turn on the abolition of national class 2 insurance contributions and the consequent changes to the contribution of class 4. Furthermore, the reduction of the corporate tax rate has been confirmed to 17% from 2020 and the VAT threshold for small business is set to remain at £85,000 for two years. Nevertheless, Dividends tax-free allowance will be decreased as promised from £5,000 to £2,000 in April 2018. As a counter-measure to this maneuver, there will be the increase in R&D expenditure credit spending from 11% to 12% and the doubling of the limits for the business investment program will help support innovative firms. In addition, this budget will duplicate the investment limit in the Enterprise Investment Scheme (EIS) for knowledge-intensive firms. Investors can currently put up to £1m into EIS qualifying investments a year and obtain tax relief upfront, that threshold now raises to £2m. Companies receiving the investment could also see their potential annual income double through the scheme, which the government stated will use more than £7bn in growth investment. The move comes as part of the government’s patient capital review, which is fostering innovative UK firms and containing investors in using the means to invest in lower-risk, rather than high-risk innovative businesses. Mr. Hammond mentioned that new measures will be introduced to balance overall investment as they are currently flowing towards lower-risk investments.
In regards to social security, the chancellor announced in his autumn Budget that he was abolishing an initial, seven-day period for universal credit claimers, during which they were ineligible for benefits. The abolition will decrease the current 6 weeks wait for most applicants to 5 weeks. The chancellor also announced he would carry forward the date claimants could first ask for an advance on the benefit to five days from the first claim. Applicants will in future have 12 months to repay advances, instead of a current period of six months. Another news comes from Britain’s minimum wage, from the next April 2018 workers will receive an inflation-busting pay rise, with the hourly rate increasing to £7.83 from its current £7.50. Nevertheless, plans to raise the rate for the over-25s to £9 an hour by 2020 has been re-routed by the unstable economy.
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