- There are the usual changes to personal allowances and tax rate thresholds. Personal allowances will increase from £11,000 for 2016/17 to £11,500 for 2017/18, a tax saving of £100 for anybody earning over £11,500. Also the higher rate threshold will increase from £43,000 in 2016/17 to £45,000 in 2017/18 saving £800 for higher income earners.
- The chancellor has also launched a Lifetime ISA. From April 2017 adults under the age of 40 will be able to contribute up to £4,000 per year into an ISA to save for retirement or for a first home. There will be a 25% bonus paid in on top of this. At the same time the investment limit for standard ISA’s will also increase to £20,000 p.a
- Corporation Tax rates will continue to drop. The chancellor had already announced in previous budgets that Corporation Tax will be reduced from 1 April 2017 to 19% and 18% by 2020. He has now reduced that further by reducing it to 17% by 2020 making the UK one of the lowest company tax rates in the G20.
- Business Rates will also be cut for many small businesses from April 2017. The chancellor has raised the rate at which small business will start to pay business rates from £6,000 (rateable value) to £12,000, with a taper relief from there to £15,000. This will mean 600,000 businesses will pay no business rates at all.
- The chancellor also announced changes to Capital Gains Tax. from 6 April 2016 the higher rate of capital gains will reduce from 28% to 20% and the basic rate from 20% to 10%, although this does not apply to the sale of residential property (the rates for this will remain as before).
- Employers will pay National Insurance on pay-offs (e.g termination payments) above £30,000 where income tax is also due. This will not affect people who lose their job, payments up to £30,000 will remain tax free and no national insurance will be due on any of the payment.
- On the subject of National Insurance Contributions, from April 2018 Class 2 NIC will be abolished. Self employed individuals currently pay £2.80 per week on profits in excess of £5,965 and class 4 NIC on profits over £8,060. From April 2018 they will only pay class 4 NIC, with these contributions being reformed so that individuals still make a contribution to retirement.
- The soft drinks industry will be hit with a new Sugar Tax from April 2018. Drinks with a sugar content of 5 grams per 100 ml will be hit with this tax, with a higher rate for those drinks with 8 grams per 100 ml. The revenue raised from this will be used to double the money available to schools for the provision of P.E and sports.
- Beer Duty has been frozen this year on beer, spirits and most ciders, which should be a welcome boost to the pub and restaurant industries.
- For the sixth year in a row Fuel Duty has been frozen for 2016/17, saving the average motorist around £75 per year.
- New rates of Stamp Duty for commercial property came in to force the day after the budget (17 March 2016). Commercial Properties with a value of up to £150,000 will pay no stamp duty at all. Properties between £150,001 and £250,000 will pay 2% on the portion between £150,001 and £250,000; and properties over £250,000 will pay 5% on the proportion above £250,000.
So there are the headlines of this year’s budget. Will it be George Osborne’s last? Who knows but one things for certain, it was potentially his most controversial with the recent resignation of Ian Duncan-Smith over welfare reforms.
Until next time………