March budget summary

Budget 2014

The March 2016 Budget took place last Wednesday 16th March and we have summarised the most significant changes that we think will be of most interest to you.

We are here to help, so please contact us if you need further information on any of the topics covered in this budget. 
 
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Personal Taxation

  • The Tax-free personal allowance, the point at which people pay income tax, is to rise from £11,000 in April 2016 to £11,500 from 6 April 2017. 
  • The higher rate threshold at which people pay 40% income tax will rise from £42,386 now to £45,001 from 6 April 2017
  • Capital Gains Tax to be cut from 28% to 20%,and from 18% to 10% for basic-rate taxpayers.  However this excludes chargeable gains accruing on the disposal of residential property.
  • Class 2 National Insurance contributions to be abolished from 6 April 2018

 Pensions and savings

  • Annual ISA limit to rise from £15,240 to £20,000 from 6 April 2016.
  • New “Lifetime” ISAfor the under-40s, with the government putting in £1 for every £4 savedThis will enable  individuals to save a maximum of £4,000 towards a home deposit or retirement  and will get a £1,000 top-up from the state every year until they turn 50 

Business Taxation

  • The main rate of corporation tax is to fall to 17% and not 18% as initially proposed in the Summer 2015 Budget by 2020 as follows:

From 1 April 2017      19%

From 1 April 2020      17%

  • Annual threshold for 100% relief on business rates for small firms to rise from £6,000 to £12,000 and the higher rate from £18,000 to £51,000, exempting 600,000 firms
  • Commercial properties – SDLT will be charged at each rate on the portion of the purchase price which falls within each rate band. The new rates and thresholds for freehold purchases and leases premiums are:

Transaction Value Band      Rate

£0 – £150,000                               0%

£150,001 – £250,000                2%

£250,000 +                                    5%

e.g A property purchase of £250,000 will now have SDLT charge of £2,000 as opposed to £5,000 under the previous rules.

Overdrawn Director’s Loan accounts

The rate of tax charged on loans to participators and other arrangements (currently 25%) is being specifically linked to the dividend upper rate, which will be 32.5% from 6 April 2016.