On 16th March the Chancellor gave what was effectively his fourth budget speech of the year, setting out his plans for the year ahead and beyond. Some of the key points are listed below, our detailed Budget Summary will follow shortly.
Changes back dated
Entrepreneurs’ relief reinstated for gains made on business goodwill transferred on incorporation to close company backdated to 3 December 2014, subject to certain conditions .
Changes with immediate effect
Entrepreneurs’ relief to apply on disposal of private held business asset when it is associated with a disposal of the business to a family member – with effect for disposals made on or after 18 March 2016.
Reforms to SDLT on non-residential property from 17 March 2016, with reductions for much commercial property (England only).
New rule to ensure trading and property income in non-monetary form brought into account from 16 March 2016.
New lifetime limit of £100,000 on CGT exempt gains on employee shareholder shares (post 16 March 2016 agreements).
Additional obligations to deduct income tax at source from royalties paid to certain non-residents imposed from 17 March 2016.
Targeted anti avoidance rule in disguised remuneration legislation from 16 March 2016.
Simplification of Enterprise Management Incentive rules in relation to post 16 March 2016 rights issues.
From April 2016
Capital gain tax rates reduced to 20% for higher rate taxpayers and 10% for basic rate taxpayers, but no change for CGT on residential property or carried interest.
CGT rate for trusts and estates reduced to 20%, but remains at 28% for residential property and carried interest.
Repeal of renewals allowance for replacement and alteration of tools
VAT registration threshold increases from £82,000 to £83,000 and de-registration threshold increases from £80,000 to £81,000.
Corporation tax charged on loans to participators (s 455 charge) which are outstanding 9 months after year end increased from 25% to 32.5%.
Benefit in kind charge on zero emission vans remains at 20% of standard van charge rather than increasing to 40% (£634 rather than £1,238).
Clarification that ‘fair bargain’ rule for benefits in kind apply where cash equivalent value is calculated by reference to tax rules rather than the cost to employer.
Duty on beer, spirits and other drinks above 22% alcohol by volume and most ciders frozen. Duty on other drinks increased in line with inflation.
Road fuel duty frozen.
From April 2017
Tax-free personal allowance increased to £11,500.
40% tax threshold increased to £33,500 of taxable income.
Two new tax allowances of £1000 each – one for trading income and one for income from property.
ISA allowance increased to £20,000.
New lifetime ISA to be launched for those aged 18 to 40 allowing savings of up to £4,000 a year on which Government will pay a bonus of 25%.
Business rates small property 100% relief limit increased from a rateable value of £6,000 to £12,000 and tapered relief limit increased up to rateable value £15,000.
More flexibility in the offset of brought forward losses for companies.
Amended rules on part surrenders and part assignments of life insurance policies to prevent excessive tax charges arising on these products.
Class 2 National Insurance contributions abolished from April 2018 and class 4 NIC reformed to provide benefit entitlements.
Employer National Insurance on termination payments above £30,000 from April 2018
Sugar levy on manufacturers of soft drinks with sugar content above 5g per 100ml introduced from April 2018
Rate of corporation tax reduced to 17% from 2020.
To prevent overseas sellers from avoiding charging VAT in the UK HMRC will be able to require non-compliant overseas traders to appoint a tax representative in the UK, and will be able to inform online marketplaces of the traders who have not complied.
Businesses who store or sell goods on behalf of overseas traders will themselves become liable for any UK VAT avoided on those sales.