Mr Osborne’s 2016 Budget announcement was set against a backdrop of worsening economic forecasts and the impending referendum on Europe.
Described a number of times by Mr Osborne as a Budget for the next generation measures were announced which will: introduce a ‘sugar levy’ on soft drinks manufacturers, provide an alternative savings vehicle for retirement, give more funding for sport in primary schools with all schools becoming academies by 2022.
The business measures were largely positive with a reduction in the headline rate of corporation tax in 2020 and further measures to ensure that large businesses in particular pay the right amount of tax in the UK.
The main tax announcements were:
- The creation of a business tax ‘roadmap’ to create a low tax environment in the UK which will encourage investment in this country;
- Corporation tax to fall to 17% from April 2020;
- Business rates thresholds increased such that 600,000 small businesses will no longer pay rates;
- Changes to commercial SDLT rates so that for lower value purchases the rates will be lower;
- Reduction in the rates of Capital Gains Tax for individuals to 20% and 10% for higher and basic rate taxpayers respectively. Will apply to disposals after 5 April 2016 but the new rates will not apply to residential property disposals;
- Entrepreneurs’ Relief, and a rate of CGT of 10%, for long term investors (note: not directors or employees and no 5% test) who have made a direct investment in a qualifying company and have held their shares for at least three years;
- A number of anti-avoidance measures;
- Loss relief for companies to become more flexible;
- Increases to income tax personal allowances and thresholds from April 2017;
- ‘Lifetime ISA’ for individuals aged under 40. An individual investing up to £4,000 per annum will get a Government contribution of £1 for every £4 invested. ISA proceeds can be accessed tax free for property purchases and/or a pension after age 60;
- Increase in IPT to 10%; and
- No increase to fuel or beer duties.
As with every Budget some of the measures will be introduced over time.
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