Kirkpatrick & Hopes - Succession Planning Accountants

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2016 Budget at a glance

Income tax

  • Personal Allowance increased to £11,500 from April 2017
  • Higher rate tax threshold increases to £45,000 from April 2017
  • UK Royalty payments to non-residents to be subject to a deduction of income tax at source
  • Sportsmen to pay to tax and national insurance on testimonial payments paid above £100,000
  • Company car tax percentages to increase by 3 percentage points to a maximum of 37% in 2019 to 2020

Capital gains Tax

  • Cut to 20% for higher rate taxpayers and 10% for basic rate taxpayers from 6 April 2016. These changes do not apply to sales of residential property such as buy to lets
  • Technical changes and extensions to Entrepreneurs’ relief including long term investors (more than 3 years) in unlisted trading companies obtaining the relief on the acquisition of new shares purchased from 17 March 2016 without the need to be a director or employee of the business
  • Introduction of a lifetime limit of £100,000 of exempt gains that a person can make on the disposal of shares acquired under Employee Shareholder Agreements entered into after 16 March 2016

Corporation Tax  

  • Reduces to 17% from 1 April 2020
  • Loan to participators (typically loans made to owners of a small company) now carry a tax rate of 32.5% an increase from 25%. This applies from 6 April 2016

Business tax –abolishment of renewals basis for Companies, partnerships, sole traders and landlords

  • Business and landlords may no longer claim the ‘renewals’ basis on replacement tools, appliances and equipment. This applies from 6 April 2016 for income tax and from 1 April 2016 for Corporation Tax

Tax changes to property developers using off shore structures to develop land

  • Legislation to be introduced from Budget day to tax these profits in the UK

Stamp Duty Land Tax (SDLT)

There are changes to the SDLT payable on commercial property. The current flat rates of SDLT are to be replaced with a banding system from 17 March 2016 the new rates will be as follows

  • Consideration between £0 and £150,000 charged at 0%
  • Consideration between £150,001 and £250,000 charged at 2%
  • Consideration above £250,001 charged at 5%

For new leasehold transactions the SDLT rates applying for rent paid under a lease are as follows:

Net present value of rent between £0 and £150,000 Rate is 0%

Net present value of rent between £150,001 and £5,000,000 Rate is 0%

Net present value of rent above £5,000,000 Rate is 5%

Insurance premium tax

This will increase by 0.5% to 10%

Car tax

This will increase in line with inflation from 1 April 2016. The extra cost will be no more than £5

Petrol

No increase in duty

Alcohol

No increase in duty except inflationary increases for wine and high strength sparkling cider.

Tobacco

Duty increases by 2% on cigarettes and 3% on hand rolling tobacco

Savings and pensions

  • Annual ISA allowance increased to £20,000
  • Lifetime ISAs to be introduced for the under 40s to provide tax free savings for retirement or house purchase

VAT 

  • Changes to the VAT rules for overseas businesses selling to the UK

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