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Analysis: How does the Budget affect you?

Philip Hammond's Budget was the final one to be delivered in the Spring before it moves to the Autumn in 2018. Credit: PA

Simon Wagman is a partner at Blick Rothenberg, an accounting, tax, and advisory practice. Here, he gives his thoughts and analysis on what the 2017 Budget means for you.

Chancellor Philip Hammond announced his first - and last - Spring Budget on Wednesday.

Ignoring Brexit, it enhanced the continued growth of Britain as a whole and invested in young people and those entering the workplace, as well as planning for retirement and the elderly.

So how does it affect you?

  • Education and young people
The Chancellor announced measures to help children and young people Credit: PA

As an introductory step, the chancellor has announced an increase of up to 30 hours of free childcare support for three and four-year-old children.

There will be 110 further free schools, in addition to the 500 already expected.

The chancellor also announced a further £3 million funding for apprenticeships by 2020.

Simon said: "The significant increase in free childcare for young parents illustrates a commitment to enabling young parents to return to the workplace.

"The free schools funding is further evidence of this government's pledge to prepare younger generations for a long future working life.

"More apprenticeships will enable a more skilled generation to enter the labour market with relevant skills and hands-on experience."

  • Employees who earn the living wage
Employees on the National Living Wage should see their take-home pay increase. Credit: PA

The National Living Wage will increase again in April to £7.50 an hour.

Mr Hammond also said that the personal tax-free allowance will increase from £11,000 to £11,500.

Simon said: "Raising the living wage will raise income levels for a considerable proportion of the population.

"Coupled with increases in the personal allowance and tax thresholds, many should see their overall income tax burden fall, and their take-home pay increase."

  • Self-employed and company owners
Many self-employed workers face far higher National Insurance contributions to HM Revenue & Customs. Credit: PA

The chancellor announced plans to remove the advantages for those who choose to be self-employed or create their own companies.

Those who are self-employed will now pay 10% in Class 4 National Insurance contributions - unless they earn less than £16,250.

For those who run their own companies, he reduced the dividend allowance that director-shareholders are entitled to from £5,000 to £2,000.

Simon said: "Hammond had sought to level the playing field, changing National Insurance contributions for the self-employed.

"However, he chose not to adversely affect savers, increasing the ISA allowance to £20,000 a year."

  • Businesses
Corporation tax is set to fall to 17% by 2020. Credit: PA

Mr Hammond confirmed the level of corporation tax will fall, as was previously announced, to 19% and then 17% in 2020.

Simon said: "This, along with the simplification of the research and development credit scheme, should continue to ensure that British business can focus on technology and innovation.

"He accepts that the changes to business rates are necessary but may have an adverse effect on small businesses, and in particular, the pub industry.

"He has announced measures to smooth out the transition and the initial burden of the changes, but fundamentally, business rates will remain, as these are required to fund local government."

  • Social care and the elderly
More funds will be made available for local authorities caring for the elderly. Credit: PA

The chancellor's flagship announcement of the Budget will see an extra £2 billion spent on social care in England over the next three years.

An investment of £1 billion will occur in 2017 to help councils and ease pressure on the NHS.

He also pledged an extra £100 million for more GPs to work in A&E during the winter months to help cut waiting times.

Simon said: "Mr Hammond has pledged to free up hospital beds, and seeks to achieve this with major changes to the funding of local authorities for caring for the elderly, together with investment in triage services.

"The additional £2 billion for social care for councils in England aims to provide security and dignity for the elderly."

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