After digesting the recent budget statement, we have provided a summary of some of the areas that we think may be of interest to our clients.

ISA Limits & the Lifetime ISA 

 From 6th April 2017, the amount you can contribute to an ISA will increase from £15,240 to £20,000 and at the same time a new kind of ISA is to be introduced for those aged 18-40. The government has provided a useful factsheet which can be found here.  Is this the start of a new way to save for retirement or just an enhancement to the existing Help to Buy ISAs?

Income Tax 

The tax-free personal allowance is being increased to £11,000 for 2016/17 and to £11,500 for 2017/18. The Chancellor has also increased the point at which someone will start to pay higher rate tax to £43,000 in 2016/17 and £45,000 in 2017/18.

It all means around £500 less tax to pay for anyone earning £45,000 per annum.  Just to remind you, the government has an objective to raise the tax-free personal allowance to £12,500 and the higher rate tax threshold to £50,000 by the end of this parliament.  Are they going to get there?

Capital Gains Tax (CGT) 

From the 6th April 2016, the 18% rate of CGT will reduce to 10% and the 28% rate to 20%. The new lower CGT rates won’t apply to residential property and you’ll pay 18% and/or 28% on those gains.  What else is the government going to try to do with residential property investment?   (See below!!)

Stamp Duty Land Tax (SDLT) 

There will be higher rates of SDLT on the purchase of additional residential properties from 1st April 2016. For further details, please refer to our previous blog on the changes, which can be found here.

Others

SDLT on non-residential property transactions is being reformed with the following rates being applicable: 0% on up to £150,000; 2% on next £100,000; and 5% on the amount above £250,000. This change is with effect from 17 March 2016.

Class 2 National Insurance Contributions (NICs) 

If you’re self-employed, you’ll save no longer be paying Class 2 National Insurance contributions (NICs) from April 2018.  Great, that’s £2.80 per week (April 2015) saved.

Other Items

No increase to duty on fuel, beers, spirits and majority of ciders.  Please remember these should not be enjoyed at the same time!