Main points from The Budget 16 March 2016
Following on from today’s budget, see below the main points from HB’s tax specialist.
Capital Gains Tax:
The rates of tax will be reduced from 28% to 20% and from 18% to 10% with effect from 6 April 2016, but the “old” rates will still apply to disposals of residential property (apart from your main residence, which is exempt).
From 1 April 2016 loans to directors etc. will be taxed on the company at 32.5% instead of 25%. This tax is only payable if the loan is still outstanding 9 months after the end of the accounting period, and it is repayable to the company if and when the loan is repaid.
From 1 April 2020, corporation tax will be reduced to 17%.
From 6 April 2017 the personal allowance will be increased from £11,000 to £11,500 and the higher-rate tax threshold is also to be increased from £43,000 to £45,000.
Class 2 national insurance, which is currently paid at £2.80 per week by the self-employed, will be abolished completely from 6 April 2018.
The annual ISA (Individual Savings Account) limit is to be increased from £15,240 to £20,000 from 6 April 2017.
A new Lifetime ISA is also being introduced from 6 April 2017 to help people save to buy their first property or to save for retirement. £4,000 per year can be saved and the government will add a further £1,000 to this. The money can be used to put towards the purchase of a first home or retained and drawn down tax-free after age 60. Each individual can open one so a couple saving for a home can effectively double the benefit.