This Budget looked as if it would be a difficult one for the Chancellor, faced as he was with disappointing economic numbers and the need to avoid ruffling feathers ahead of June’s in/out referendum.
What was to have been the big announcement – reform of pensions – was kicked into the long grass a few weeks ago. Nevertheless, Mr Osborne did spring a few surprises, including some tax reductions.
How will this Budget affect you? If you are, or want to be, a saver, then there is plenty to consider. From April 2017 a new ISA, the Lifetime ISA, will be launched for the under-40s. It looks as if it is a close relation of the recently abandoned pensions ISA. Also from 2017/18, the normal ISA contribution limit unchanged for 2016/17 will rise to £20,000.
Capital gains tax (CGT) rates will fall from 2016/17 to 20% and 10%, although the current rates of 28% and 18% will continue to apply to residential property (another buy-to-let attack) and carried interests. There will be a new entrepreneurs’ relief (effectively 10% CGT) for external long term investors in unlisted companies.
Other important changes included:
- Increases in the personal allowance for 2017/18 to £11,500 and the higher rate threshold to £45,000.
- A restructuring of stamp duty land tax (SDLT) on commercial properties.
- A major revamp of business rates, permanently doubling the Small Business Rate Relief.
For a concise picture of yesterday’s announcements, please download our 2016 Budget Summary Report.