As trusted accountants in Kent and Central London, it goes without saying that we stay abreast of the latest news, and especially in regard to any changes in legislation that are relevant or likely to impact on our clients. Here, we provide our summary of the 2016 Budget:
The tax-free personal allowance had already been set at £11,000 and the basic rate band at £43,000 for the 2016/17 year. The Chancellor announced well in excess of inflation increases to £11,500 and £45,000 for the 2017/18 year: good news for low and middle income taxpayers.
Ahead of the Budget, substantial speculation focused on an anticipated shake up to the tax relief on pension savings. However, it would appear that the proposed overhaul was scrapped – at least for the time being – and this decision will be especially welcomed by those of our clients who are saving for retirement.
It was announced that a new lifetime ISA will be introduced for individuals aged between 18 and 40. From 6 April 2017 up to £4,000 per annum can be invested and the Government will top it up with a 25% bonus to assist in the purchase of a first home or after the age of 60 to provide tax-free pension income (if the individual withdraws funds for any other purpose, the 25% bonus plus any growth on it will be paid back to the Government along with a 5% charge).
The current ISA limit will increase to £20,000 from 6 April 2017, meaning savers are one of the big winners from the Budget.
It was also announced that from 6 April 2016, capital gains tax rates will reduce from 28% to 20% for higher rate taxpayers, and from 18% to 10% for non and basic rate taxpayers, except for gains on residential property.
Entrepreneur's relief was extended; an external investor who subscribes for shares in an unlisted company after 5 April 2016 will be entitled to claim this relief so long as they hold their shares for at least three years.
Small businesses look to be the other big winners from the Budget with the corporation tax rate set to fall to 17% by 1 April 2020 and an increase in the small business rate relief thresholds.
On the subject of loans to participators, the rate of corporation tax payable when a company makes a loan to a participator (usually a director) from 6 April 2016 increases from 25% to 32.5%.
The budget meant further bad news for landlords with the higher stamp duty land tax rates due to go ahead as planned. After consultation, the Government has decided not to include an exemption from the higher rates for significant investors owning more than 15 properties.
The theme of tackling tax avoidance and compliance has continued with further measures announced to clamp down on tax avoidance arrangements. In particular, further legislation will be introduced to prevent individuals gaining a tax advantage by converting income into capital when winding up a company. The Government will also consult over the summer on whether to make certain licenses or services conditional on the business being registered for tax.
As established accountants with an underlying ethos of being 'exceptional as standard', we provide accountancy support and guidance to clients of all sizes and from many diverse sectors with a range of services which includes:
To find out how Perrys Chartered Accountants in Kent and Central London can benefit you or your business, please call us or visit your nearest branch.
Please note that this article does not constitute financial advice – it is general in nature and intended to be informative. Perrys advise that individuals should always seek the advice of a qualified and registered accountant or financial adviser in relation to their specific circumstances.
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