There are budget summaries a plenty across the internet but here is our take on some of the highlights that will affect our clients:
The Corporation Tax rate which was already due to fall will now fall further. It is due to fall from 20% to 19% in 2017 and will now fall to 17% by 2020. This will be good news for many of our clients and go some way to making up for the new Dividend Tax which is starting on April 6th this year.
The personal tax threshold continues to rise, up to £11,500 from 2017. However the NI thresholds aren’t going up at the same rate so for small business owners the salary they pay themselves still needs to be carefully considered.
The basic rate band is rising to £45,000 from next year which will be a welcome boost as this threshold has not been significanctly raised for years.
CGT rates have been reduced to 10% and 20% for basic rate and higher rate taxpayers respectively which is good news for some. However residential property now will have an 8% surcharge leaving it at the same rate as before. Entrepreneur’s Relief has been extended and is still available to those selling a business.
S455 tax, or the tax that must be paid in a Director’s Loan account is overdrawn more that 9 months after a Company’s year end, has been raised to 32.5%. This is to mirror the effective rate of tax that there will be after the new Dividend Tax starts this April.
P11ds will hopefully be on the way out for most Employers as the payrolling of benefits regime is extended. The budget included non cash vouchers which were previously excluded.
Class 2 National Insurance contributions for the Self Employed are to be axed saving each person £145.60 a year.
There were a couple of announcements on Stamp Duty on commercial buildings and Business Rate relief which apply to England only. We will wait and see how the Scottish Government responds to these.
There were plenty more minor changes. The full details are here: https://www.gov.uk/government/publications/budget-2016-documents/budget-2016#executive-summary
If you would like any advice on these changes please don’t hesitate to give us a call.