On 21 February 2017, the Treasury Minister presented the Budget 2017-18 in Tynwald. Details of the draft proposals are summarized below:
Key features of the 2017-18 Budget include:
- Personal income tax allowance increased by £2,000 to £12,500, making more than 44,000 individuals better off and lifting 3,300 out of the tax net.
- Child Benefit to rise by 2%, the first increase since 2010.
- Additional £11 million annual funding for health services.
- A £25 per week benefits increase for individuals paying for residential nursing care, plus an increase in the maximum tax deduction for nursing expenses from £9,300 to £12,500.
- Tax cap for new entrants to the scheme to increase from £125,000 to £150,000 in 2018/19, to £175,000 in 2019/20 and to £200,000 in 2020/21.
- New cross-Government savings and efficiencies team, tasked with finding additional annual savings totalling £25 million, will be asking Ministers and Chief Officers for cost reduction options. Other Tynwald Members, Government staff and the public will be able to submit their savings suggestions through an online portal.
Other key points from the 2017-18 Budget:
- Five-year capital investment program of £388 million, including £298 million of engineering and construction projects, supporting the public service infrastructure, economy and employment.
- Continuation of the £50 million Enterprise Development Fund and 0/10% corporate taxation regime for business.
- Five Year Financial Plan to secure a sustainable reserves position by 2021/22. Use of reserves in 2017/18 is budgeted at £80 million, including £50 million of investment income. Value of reserves today is £1.6 billion, projected to rise to £1.66 billion by 2021/22.
- Government’s employer contribution to public sector pensions held at 15%. Public Service Pension Reserve to be depleted by 2020/21, leaving £58 million shortfall to be met from general revenue.
- Continuation of 1% cap on budget for Government staff pay awards.
- Basic state pension to rise by 2.5%.
- £1 million to establish a new Brexit Fund, for issues arising from the UK’s departure from the EU.
- In line with the UK, abolition of Class 2 National Insurance contributions for the self-employed with an increase in their Class 4 contributions from 8% to 11% from April 2018.
- Maximum tax deduction for interest paid on loans and mortgages reduced from £7,500 to £5,000.
- New benefit in kind incentive to encourage cycling to work.
