As anticipated, yesterday’s budget speech by the Chancellor contained many measures that are going to be unpopular in many quarters. There was little in terms of giveaways and, given that it is five years until the next election, this was always going to be a budget focused on raising revenue and cutting welfare costs. As always the devil is in the detail but some headline points that are sure to be of interest to many are as follows:
Reform of dividend taxation resulting in the scrapping of the 10% tax credit and the introduction of a 7.5%, 32.5% and 38.1% tax rate for basic, higher and additional tax rate payers.
A reduction in the rate of corporation tax to 19% in 2017 and 18% in 2020.
Annual Investment Allowance for businesses set at a permanent rate of £200,000 per annum from January 2016.
Introduction of a compulsory living wage for employees aged over 25, set at £7.20ph from April 2016 and rising to £9.00ph by 2020.
Employment Allowance to increase to £3,000 from 2016 but will no longer be available to one person companies.
Restriction of tax reliefs available to Buy to Let landlords.
Modest increases in tax free personal allowance and higher rate tax threshold
New IHT exemption for main homes being passed to children on death will mean an effective total IHT nil rate band of £500,000 for homeowners.
A range of cuts to the welfare state including an effective reduction in Tax Credits and Universal Credits and real terms cuts to working age benefits over the next four years.
For more detail feel free to download our Budget Summary, please also take the opportunity to explore the other great factsheets available in the resources section of our website.