A Budget
For the Next Generation
The Chancellor has just sat down from delivering the 2016 Budget speech. We will provide more details on the changes announced as they emerge however the main tax and savings matters referred to in the speech were as follows:
Capital Gains Tax
• The top rate of CGT will fall from 28% to 20% on gains accruing on or after 6 April 2016
• The lower rate of CGT will fall from 18% to 10% on gains accruing on or after 6 April 2016
• An 8% CGT surcharge will apply to gains on residential property
• Entrepreneurs’ Relief is to be extended to external investors in unlisted trading companies for shares issued after 17 March 2016, with a minimum 3 year holding period
Business Tax
• The tax on loans to participators, made on or after 6 April 2016, will increase to 32.5%
• From April 2017 tax relief for large company interest costs are to be capped at 30% of UK taxable earnings
• The rules on Withholding Tax on royalties to tax havens will be strengthened
• The use of Corporation Tax losses incurred from April 2017 will be more flexible except for the largest companies where there will be a restriction
• Tax payment dates for larger companies will be aligned to when profits are earned
• Corporation Tax rates are to fall further to 17% by April 2020
Pensions and ISA’s
• The ISA limit will increase to £20,000 from April 2017
• The tax free pension lump sum is to stay
• A Lifetime ISA will be introduced from April 2017 so that those under 40 can save up to £4,000 a year with up to a £1,000 government contribution. This ISA can be used to save for retirement or to purchase a first home
Stamp Duty Land Tax
• The slab system will be removed for commercial property, to bring it into line with residential property, effective from midnight tonight
• The higher SDLT rates on residential property due to take effect next month will also now apply to larger investors
• Owners of two residences will have 36 months to dispose of one and claim a refund of the higher SDLT charge
Tax Avoidance
• Disguised remuneration is to be targeted again
• Exempt gains are to be capped for shares acquired under Employee Shareholder Status
• From April 2018 termination payments over £30,000 will be subject to Employer’s NI
Income Tax and NIC
• Class 2 NIC is to be abolished from 2018
• The Income Tax personal allowance will be raised to £11,500 from April 2017
• The Higher Rate threshold of Income Tax will be increased to £45,000 from April 2017
Duties and Miscellaneous
• Insurance Premium Tax is to be increased by 0.5%
• A Sugar Levy is to be introduced in the drinks industry
• Fuel Duty will be frozen at the current level
• Duty on beer, cider and whisky will be frozen
• Small Business Rate Relief is to be extended
This is very much an overview of the speech and more details will be available in the press releases on which we will report in due course. If you do require any further information at this stage please contact our Tax Director Jenny Marks.
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