The Spring Budget 2016 - Full summary
The Chancellor delivered his 2016 Budget earlier this afternoon, promising to “put the next generation first”.
The sugar levy on soft drinks has unsurprisingly grabbed many headlines, as has the introduction of a lifetime ISA for the under-40s.
Unashamedly including a pro-EU message in his speech, the Chancellor made it clear that all economic forecasts assume that the UK remains in the EU after June’s referendum, and that the economy is on course to clear the deficit by 2020, despite a revision downwards of the growth forecasts. Sterling has dipped slightly this afternoon against both the Dollar and the Euro.
Offering “long-term solutions for long-term problems”, Mr Osborne did however announce quite a number of tax changes, of varying significance. The increase in the Personal Allowance and higher rate threshold for income tax from 2017 are welcome, as are the reductions to the Capital Gains Tax (CGT) rates to 10% for basic rate and 20% for higher rate taxpayers. The reduction in the CGT rate aims to encourage enterprise, and will not therefore apply to the sale of residential property or carried interest for private equity investors.
From midnight tonight, there will be a fundamental reform to Stamp Duty Land Tax (SDLT) for commercial properties, moving to a progressive rather than "slab" system. This now mirrors in structure, if not rates, SDLT on residential property.
For companies, the Treasury’s “Business tax road map” includes a further reduction in the Corporation Tax (CT) rate to 17%, by 2020, which will give the UK one of the lowest CT rates, certainly as compared with other major economies. On the same date, reforms will be made to the loss relief for corporates, to increase the flexibility of the utilisation of losses in different streams or group companies. The cost of this flexibility will be a restriction of relief to 50% of profits above £5m. New rules will also apply, from 2017, to limit the tax relief that large multinationals can claim for their interest expense.
Please click here to download a full summary for further details of all key tax announcements. We expect more with the publication of the Finance Bill on 24 March 2016. Do not hesitate to contact me, or any of the haysmacintyre team, if you have any queries.
Partner, Head of Tax
Tel: +44 20 7969 5610