Spring Budget 2017: Thoughts from the Osborne Clarke Tax Team

Written on 10 Mar 2017

Putting Britain at the “cutting edge of the global economy” was the theme of the Chancellor’s first and last Spring Budget.

Other than the considerable media interest in the rise in NIC rates for the self-employed (the legislation for which has since been announced is to be delayed until the Autumn), it was a fairly quiet Budget, with little substantive change from a tax perspective.

Our tax, incentives and pensions partners respond to the measures announced on 8 March 2017.

More on anti-avoidance

In view of the various changes announced in the Autumn Statement, we were not expecting further significant tax changes in this Spring Budget although, as anticipated, there were further anti-avoidance measures. It was reassuring to hear that the Chancellor continues to be committed to the Business Tax Roadmap introduced by his predecessor George Osborne and that corporation tax will continue to drop to 17% in 2020. It would seem that any significant tax changes will come in the autumn, when the Chancellor’s move to having just one Budget per year begins.

Michael Bell, Partner, Tax

Research & development

The Chancellor’s 2016 Autumn Statement raised hopes in many quarters that there would be a review and (hopefully) an extension of the UK’s R&D system – in line with the UK’s aspiration to be the top destination for high-tech R&D in Europe.

Whilst the Chancellor’s commitment to simplifying the R&D claims process for SMEs is very welcome, it fell short of what many commentators were hoping for.

The Chancellor has said that the UK’s R&D rules are internationally competitive, but with many countries seeking to attract this “golden goose” of inbound investment, the UK must make sure that the UK does not become complacent about its attractiveness to overseas investors.

Erika Jupe, Partner, Tax

The self-employed and the gig economy

HMRC has been grappling with the taxation of personal service companies (PSCs) for many years and has effectively left them out of account with recent changes to the taxation of agency workers; one might suggest that they fell into the “too difficult” pile. However, last year saw HMRC start the process of change, by introducing reforms of the intermediaries legislation (IR35) in relation to off-payroll working in the public sector, which are due to come into effect from April 2017. This was confirmed in the Spring Budget and the Chancellor took this opportunity to set out his thoughts on self-employed workers paying their fair share of tax.

His announcement to increase Class 4 NICs in April 2018 is a politically sensitive move, which will no doubt receive a lot of press. The reduction in dividend allowance from £5,000 to £2,000 from April 2018 will further erode the benefit of working through a PSC. We will inevitably see further changes as the government awaits Matthew Taylor’s report on different employed practices, which is due in the summer.

Tracey Wright, Partner, Tax


It is good to see the implementation date for the changes to SDLT compliance delayed for at least another year. This will give business and advisers plenty of time to improve processes to ensure they can meet the 14 day period for filing land transaction returns when introduced.

Tracey Wright, Partner, Tax

Employee incentives

As expected, it was a fairly uneventful Budget for employee share plan practitioners. Confirmation that the government will seek State Aid approval to extend the provision of EMI tax relief beyond 2018 will of course be welcomed, and it is to be hoped that EMI will continue unaffected long after the UK leaves the EU.

From a wider employee benefits perspective, we await the promised consultations and calls for evidence on employer-provided accommodation, employee expenses and the taxation of benefits in kind. However, it is the anticipated increase in NIC rates for the self-employed which will be making the headlines.

Michael Carter, Partner, Tax


The new tax charge on transfers to overseas schemes needs immediate action. However, in terms of individual pension savings and allowances, this has been a relatively uneventful budget. It is a shame that opportunities to simplify the current system, for example by looking again at the tapered annual allowance, have not been taken.  It also remains to be seen what impact the LISA will have on pension saving and whether the reduction of the money purchase annual allowance to £4,000 will serve the purpose the government intended. However, it is good to see that, for the time being at least, no further complexity has been introduced.

Mark Womersley, Partner, Pensions

Note: The Partner comments were first published in Practical Law.