The March 2016 Budget has a huge amount of changes affecting all areas of personal and business tax.
The Chancellor George Osborne has delivered his March Budget 2016 and here is a brief summary of the main points. The speech set out his plans that would “focus on the long term”, “put the next generation first” and “help make the UK fit for the future”.
As ever the devil is always in the detail and more information will come to light over the coming days as further analysis is done.
If you feel like a cozy read, please follow this link to get the full 148 pages but even this won’t tell the full story…
Growth forecasts were cut for every ongoing year. For 2016, that means a drop from 2.4 per cent to 2 per cent. The OBR also believes the economy is fundamentally less productive than previously thought.
The inflation forecast for 2016 was cut from 1 per cent to 0.7 per cent.
The Debt to GDP ratio was revised up from 81.7 per cent to 82.6 per cent for 2016-17, which means Mr Osborne misses his target to have Debt to GDP fall every year.
The borrowing forecast was revised up from £49.9bn to £55.5bn for 2016-17, and for every other year until 2019, when the Chancellor predicts an unexplained £10.4bn surplus.
New spending cuts of £3.5bn will be required by 2020.
The Corporation Tax rate is to fall from 20 per cent at the start of this parliament to 17 per cent by 2020 following the previous announcement of a reduction to 18%.
The threshold for small business rate relief was raised from £6,000 to £15,000. Mr Osborne estimates 630,000 businesses will no longer pay any business rates.
However, a series of other changes to the system are expected to raise £9bn over the Budget period, mostly from large corporations.
Reforms to the use of Corporation Tax Losses were announced.
The tax-free allowance will be raised to £11,500, affecting 31m people, from next year. The aim is to reach £12,500 by the end of the parliament.
The higher-rate tax threshold will be raised to £45,000, cutting by half a million the number of people paying top rate tax.
The previously announced abolition of Class 2 National Insurance was confirmed.
All schools are to become academies and must have in place a strategy for this by 2020.
A new levy on producers of sugary drinks was announced in an effort to tackle childhood obesity, possibly raising over £500m a year.
Fuel duty was frozen again.
Tobacco tax will be increased by 2% over RPI and hand rolling tobacco by 5%.
Beer, cider, whisky and other spirits duties were frozen.
Capital Gains Tax
The headline rate will be cut from 28 per cent to 20 per cent.
Changes were announced to Entrepreneurs Tax Relief.
The ISA limit is to rise from £15,000 to £20,000 from next year.
A new “LISA” — or Lifetime Isa — will be available for under 40-year-olds from next year. The government will give you £1 for every £4 you save, up to an annual limit of £4,000 with the money used either for pension saving or a first time house purchase.
The March 2016 Budget may be subject to amendment in a Finance Act and is still to be debated in Parliament so do not make any decisions based on this early summary without speaking to us first.
For further information on each area please follow the links below: