2016 Budget Headlines
16 March 2016
The Chancellor has just delivered another financially prudent budget which made great play of ‘putting the next generation first’ with a series of interesting, innovative ideas.
In the light of the worsening global financial outlook since his optimistic Annual Statement in November, he has had to show a degree of prudency.
Mr Osborne is adamant that he will still eradicate the budget deficit by 2020. By postponing a number of proposals until 2019 he has minimised the impact over the next few years and has come up with an attractive package of measures.
This overview gives a brief introduction of key points ahead of a more detailed brief which will be distributed tomorrow.
- Further devolution of power to regional assemblies and governments.
- All schools are to become, or to be working towards becoming, Academies by 2020.
- Pledge for ‘fair funding’ for schools across the country to improve facilities.
- Levy on high sugar content soft drinks to be introduced.
- Continued drive on tightening up on tax avoidance.
- Increase in the tax free Personal Allowance to £11,500 from 6 April 2017.
- Increase in the threshold at which higher rate Income Tax is levied to £45,000 from 6 April 2017.
- Capital Gains Tax rates reduced from 18% to 10% for basic rate tax payers and from 28% to 20% for higher rate tax payers from 6 April 2016.
- No further announcements yet on the proposed fundamental changes to the taxation of dividends.
- The Government to consider limiting the range of Salary Sacrifice benefits that attract relief from Income Tax and National Insurance Contributions.
- ISA annual allowance increased to £20,000 from 6 April 2017.
- New Lifetime ISA introduced from April 2017 enabling adults under the age of 40 to save up to £4,000 per year and receive a 25% bonus from the Government.
- Simplification of the National Insurance Contributions regime by abolishing Class 2 NICs from 2018 and reforming Class 4 NIC.
- Duty frozen on fuel, beer, cider and whisky.
Business and Corporation Tax:
- Corporation Tax rate reducing to 17% from 1 April 2020.
- Entrepreneurs’ Relief rules amended to extend the availability of relief on Associated Disposals of business assets when retiring or reducing participation in the business.
- Entrepreneur’ Relief rules amended that changes the treatment of joint venture and corporate partnerships.
- Increased administration and requirement to deduct tax at source from more types of royalty payments.
- Threshold for tax relief on employer-arranged pension advice to increase from £150 to £500 per employee from 6 April 2017.
- Stamp Duty Land Tax charging provisions for the purchase of commercial property reformed in line with the changes to residential property announced last year. All property purchases now subject to tax on a ‘slice system’ and not the old ‘slab system’.
- Business Rates exemption threshold increased to £15,000 which will help many small businesses.
The Old Mill tax team are currently reading through the treasury documents and will distribute a more detailed review of today’s announcements tomorrow.
Please note that this should not be taken as advice and no action should be taken that may affect your personal or business situation without professional consultation.