On Wednesday 16 March 2016, George Osborne presented the first Spring Budget of this Parliament reporting on ‘an economy set to grow faster than any other major advanced economy in the world’.
The Budget updates previous announcements and also proposes further measures. Some of these changes apply immediately, others in April 2016 and some take effect at a later date.
Our summary focuses on the issues likely to affect you, your family and your business. To help you decipher what was said we have included our own comments. If you have any questions please do not hesitate to contact D E Ball for advice.
Our main concentration on the tax measures include:
- reductions in the rates of capital gains tax
- introduction of a Lifetime ISA for under 40s
- reduction in the corporation tax rate
Capital Gains Tax
The current rates of CGT are 18% to the extent that any income tax basic rate band is available and 28% thereafter. The government is to reduce the higher rate of CGT from 28% to 20% and the basic rate from 18% to 10%. The trust CGT rate will also reduce from 28% to 20%.
Example 2016/17
Annie, a higher rate taxpayer, has the following chargeable gains after the annual exemption:
- Gains eligible for ER £100,000
- A residential property gain £30,000
- Other gains £10,000
The ER gain is taxable at 10%. The residential property gain will be taxed at 28% and other gains at 20%.
Lifetime ISA
A new Lifetime ISA will be available from April 2017 for adults under the age of 40. Individuals will be able to contribute up to £4,000 per year and receive a 25% bonus from the government. Funds, including the government bonus, can be used to buy a first home at any time from 12 months after opening the account, and can be withdrawn from age 60 completely tax-free.
Corporation Tax
The main rate of corporation tax is currently 20% and this rate will continue for the Financial Year beginning on 1 April 2016. The main rate of corporation tax will then be reduced as follows:
- 19% for the Financial Years beginning on 1 April 2017, 1 April 2018 and 1 April 2019
- 17% for the Financial Year beginning on 1 April 2020.
Read the full Budget report from D E Ball online http://www.deball.co.uk/news/budget-report