Monthly Archives: March 2016

Budget Summary – Spring 2016
March 2016

tree graphicClick here to view our summary of the key announcements in Chancellor’s 2016 Spring Budget statement.  We hope you find it useful and interesting.

This was the third Budget within a year, but George Osborne still managed to produce a few surprise measures among the inevitable re-announcements.  The most significant measures included:

  • 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% government bonus on savings.
  • A cut in the main rates of capital gains tax from 2016/17 to 20% for higher and additional rate taxpayers and 10% for other taxpayers, although the existing rates will continue to apply to gains on residential property and carried interests.
  • An increase in the income tax personal allowance for 2017/18 to £11,500 and the higher rate threshold to £45,000.
  • Two new £1,000 tax allowances for property income and trading income, starting in April 2017.
  • A restructuring of stamp duty land tax (SDLT) on commercial properties.
  • A major revamp of business rates, permanently doubling the Small Business Rate Relief.
  • The abolition of Class 2 National Insurance contributions from 6 April 2018.

If you have any questions about the summary’s contents or how any aspects of your tax and financial planning may be affected by the Budget, please get in touch with us to discuss them.

Please note that the Financial Conduct Authority does not regulate tax advice

Tax Tables 2016/17
March 2016

tree graphicClick here to view our tax tables for the 2016/17 tax year, updated for announcements made in the Budget.  We hope you will find them useful and interesting.

Please get in touch if you would like a discussion with us about your tax or general financial situation.

 

Budget 2016 – Key Points
March 2016

budgetThe Chancellor’s third Budget in the space of 12 months was expected to be less exciting than its two predecessors. His room for manoeuvre was seen as constrained by disappointing economic numbers and June’s EU referendum. Nevertheless Mr Osborne managed to produce a range of surprise measures – including some tax cuts and new tax incentives alongside the predictable anti-avoidance attacks. Some of the key points are:

  • 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 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.
  • A restructuring of stamp duty land tax (SDLT) on commercial properties, with higher tax bills on more valuable properties.
  • 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.
  • 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.
  • There were the usual raft of anti-avoidance and evasion measures, with restrictions on tax relief for business interest and the use of tax losses.

If you have any questions about how aspects of your tax and financial planning might be affected by the Budget, please get in touch with us to discuss them.

Time to start planning for the new Tax Year?
March 2016

Calendar+penAs we near the end of the tax year, now is the time to consider not only year end planning, but also planning for the new tax year.

It is one of the features of the political cycle that the more difficult and less palatable legislation tends to come at the start of a parliamentary term rather than as an election nears.  Tax changes are very much a case in point: the rises come soon after an election, the cuts shortly before the election.  When 2016/17 starts there will be a number of important tax changes scheduled to take effect which need to be built into your financial planning:

  • Lifetime allowance  The lifetime allowance effectively sets the maximum tax-efficient value of all your pension benefits.  It started life in 2006 at £1.5m, reached a maximum of £1.8m and will be cut from £1.25m to £1m on 6 April 2016.  It will be possible to claim some transitional protection, although final details are still awaited.
  • Annual allowance  The annual allowance effectively sets the maximum tax-efficient annual input to all your pension benefits, regardless of source.  It started life in 2006 at £215,000, reached a maximum of £255,000 and is now £40,000. From 6 April 2016 a new tapered annual allowance will be introduced, which may affect you if your total income (not just earnings) exceeds £110,000.  The taper will mean that your annual allowance could be as low as £10,000.
  • Dividend taxation  The new tax rules for dividends begin on 6 April.  If your dividend income is less than £5,000 you will have no tax to pay, but if you have substantial dividend income – perhaps from a shareholding in a private company – then your dividend tax bill could increase.
  • Savings Allowance  This new allowance will mean that if you are a basic rate taxpayer you have no tax to pay on the first £1,000 of interest, while if you are a higher rate taxpayer, then £500 will suffer no tax.  In line with these new allowances, interest from banks and building societies will be paid without deduction of tax (but it will still be taxable).

If any of the changes gives you pause for thought, do contact us. Each one offers planning opportunities, not all of which are obvious.

The value of your investment can go down as well as up and you may not get back the full amount you invested. The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.