Chancellor Phillip Hammond produced little in the way of surprises in his Budget 2017.
Although he was on his feet in the House of Commons for just over an hour, much of his speech was filler or confirmation of announcements in his Autumn Statement 2016.
He did celebrate Britain’s growing economy – set to expand by at least 2% in the coming year to make the UK one of the leading developed world economies.
But Hammond was keen to point out that no one can predict how the shockwaves from Brexit may upset economic progress and sensibly argued keeping some billions in reserve was more prudent than handing out tax cuts.
The main change was slashing the annual dividend allowance from £5,000 to £2,000 a year from April 2018.
Hammond explained the move would decrease the tax benefits of incorporating and raise more cash for the Treasury. He says 80% of investors would still pay no income tax on dividends they receive, even if they have portfolios worth up to £50,000.
For UK tax residents and offshore landlords renting out homes in Britain, the personal income tax allowance rises to £11,500 from April 6, 2017 and the high rate tax threshold also increases by £2,000 to £45,000.
This cuts tax for 31 million people and takes 1.5 million out of the tax net completely, said Hammond.
For expats who remain UK tax payers, National Savings bonds will pay a market-leading 2.2% return for investments between £100 and £3,000 – a £66 a year interest payment for investing the maximum amount.
Expats will pay a new 25% transfer charge when switching UK retirement savings to Qualifying Recognised Offshore Pension Schemes (QROPS) if they fail some strict conditions.
From March 9, 2017, they must live in the same place as their QROPS is based, live in the European Economic Area (EEA), and have a QROPS in an EEA country or belong to an employer scheme.
New tax rules are on the way to make sure property investors who are based offshore but develop property in the UK will pay tax on their profits from March 8, 2017.
Rent-a-room relief will undergo an update to stop landlords claiming tax relief for holiday lets through web sites such as Airbnb.
The aim of the relief, says HMRC, is to help landlords offering long-term lettings to lodgers, not holiday lets.
Landlords have also won a year’s grace from signing up to the Making Tax Digital program of quarterly tax reporting.
From April 2019, landlords must join the HMRC scheme.
Landlords turning over up to £150,000 will have clearance to draft their accounts on a cash basis if a consultation backs the proposal.
Under the cash basis, income is recorded when received and expenses are recorded when paid, which can be different dates to when the documents recording the transaction are dated.