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The Chancellor Philip Hammond presented the last Spring Budget on Wednesday 8 March 2017. In his speech the Chancellor was keen to point out that he wanted the tax system to be fair, particularly in relation to the distinction between employed and self-employed individuals. In this article, we look at how the Chancellor’s Spring Budget impacts care homes.

In the Budget speech the Chancellor announced that he has requested a report to be delivered in the summer on the wider implications of different employment practices. Also, the Budget included changes to NICs and the Dividend Allowance.

In December and January the government issued a number of clauses, in draft, of Finance Bill 2017 together with updates on consultations.

The Budget updates some of these previous announcements and also proposes further measures. Some of these changes apply from April 2017 and some take effect at a later date.

Our summary focuses on the issues likely to affect you and your business.

Main Budget tax proposals

Our summary concentrates on the tax measures which include:

  • increases to the Class 4 National Insurance rates – Update 15/03/17 – Chancellor withdraws plans to increase NI.
  • a reduction in the Dividend Allowance from £5,000 to £2,000
  • changes to the timing of Making Tax Digital for smaller businesses.

Previously announced measures include:

  • increases to the personal allowance and basic rate band (a decreased band for Scottish residents)
  • the introduction of the Apprenticeship Levy
  • changes to corporation tax loss relief
  • the introduction of an additional inheritance tax residence nil rate band
  • changes for non-UK domiciled individuals.

Main Budget announcements (care home specific)

  • £2bn investment in social care over the next three years
  • £1bn available in 2017/18
  • £100m to fund traige projects in A&E to help relieve pressure
  • Chancellor ruled out “death tax” – a 10% levy on estates to fund social care
  • English councils to receive £300m of discretionary relief to support those affected by increase in business rates
  • Businesses losing rate relief will see their increases capped at a maximum of £600

 

Care home 2017 Budget impact


Sigh of relief as Chancellor promises £2bn fund

The overall opinion coming out of the care sector is relief. Senior figures believe that the Government has finally listened to their pleas for funding. However, having praised the Government for making the funds available, they have also warned that the money will only be an effective use of tax payers money if the Green Paper on adult social care can deliver the reforms that are necessary for putting the sector on a stable footing, so care homes will no doubt be looking ahead to engage with the Government as policies begin to take shape.

The Chancellor also ruled out Labour’s so-called “death tax” in response to speculation that such a tax would be introduced. For a bit of background, the Labour Government proposed the “death tax” before the 2010 election and this consisted of a 10% levy on estates in order to fund social care.

Business rates

Another bit of good news is the £435m to support businesses that are affected by the increase to business rates. English councils will see £300m of discretionary relief to use locally and this will be available to charities. As well as that, those who will be losing rate relief will see their increase capped at £600, which is welcome news.

Scott Sanderson, Care home specialist and Partner at Hawsons, had this to say: “While the £2bn is welcome news and an important step in recognising the crisis that social care faces, the sector has still had roughly £5bn worth of cuts since 2010. We will await the Green Paper to see the Governments reforms and what effect this will have on the sector.”

More from our care sector experts

You can also find all of our latest care sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on [email protected] or 0114 266 7141.

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