Budget 2016

March 17, 2016

Our summary of the key points from this year’s Budget are as follows:

Click here to read our summary guide flip book.

  • A cut in the main rates of capital gains tax from 2016/17 to 20% for higher and additional rate taxpayers and to 10% for basic rate taxpayers, although the existing rates (28% and 18%) will continue to apply to gains on residential property and carried interest.
  • An extension of the entrepreneurs’ relief 10% tax rate to capital gains made by long term investors in unlisted companies.
  • Two new £1,000 tax allowances for property income and trading income, starting in April 2017.
  • A cut in the corporation tax rate to 17% in 2020 from the previous target of 18% and a two year deferral of the planned acceleration in the timing of tax payments by large companies.
  • An increase in the personal allowance for 2017/18 to £11,500 (£11,000 in 2016/17) and a rise in the higher rate threshold to £45,000 (£43,000 in 2016/17). Both are steps towards the long term goals of a £12,500 allowance and £50,000 threshold by 2020/21.
  • A restructuring of stamp duty land tax (SDLT) on commercial properties, with higher tax bills on more valuable properties.
  • The loans to participators tax rate will be increased from 25% to 32.5% with effect for loans, advances and arrangements made on or after 6 April 2016.
  • A major revamp of business rates, permanently doubling the Small Business Rate Relief.
  •  An increase in insurance premium tax from 9.5% to 10% from 1 October 2016 which will be used to finance additional flood defence expenditure.
  • The launch of a new Lifetime ISA from April 2017 for adults under the age of 40, with a maximum contribution of £4,000 a year and a 25% bonus on savings. The standard ISA investment limit will rise to £20,000 at the same time.
  • From April 2017, public sector bodies and agencies will be made responsible for operating the tax rules for individuals who work in the public sector off-payroll through limited companies.
  •  A new help to save scheme for low income households, offering a 50% bonus after two years of savings of up to £50 a month.
  • The abolition of Class 2 National Insurance contributions (NICs) from 6 April 2018. From the same date, termination payments over £30,000, which are subject to income tax, will also become subject to employer NICs.