March 16th 2016 - George Osborne's 8th budget and here are the main headlines that may affect you:
- Personal allowance to rise to £11,500 in April 2017 (already set to rise to £11,000 in April 2016). Tory manifesto promised an increase to £12,500 by the end of the parliament.
- Higher rate of tax starting at £45,000 from April 2017 (currently £42,385 and rising to £43,000 in April 2016) and Tory manifesto promised to reach £50,000 by the end of the parliament.
- Capital Gains Tax to fall for higher rate tax payers from 28% to 20% and for basic rate tax payers from 18% to 10%. Unfortunately this does not apply to capital gains on residential property, the government has made it very clear in it's last three budgets that it wants to encourage people to invest in business and not residential property.
- Corporation tax to fall to 17% instead of 18% from 2020 (still set to fall to 19% from April 2017).
- Annual ISA limit to rise from £15,240 to £20,000 in April 2017.
- From April 2017 new lifetime ISA announced for under 40s. Put in £4,000 a year and the government will put in a £1,000 bonus each year until you turn 50. This "bonus" however is conditional on how the money is used. If you use the funds to buy a home (worth less than £450k) then you will get the full bonus. If you use the funds as retirement income after you turn 60 then you will get the full bonus. If you take the funds out for any other reason then you have to pay the bonus back to the government plus any interest earned on the bonus and a 5% admin charge.
- If you own one property and you buy a second then you will have to pay the increased stamp duty from April 2016 on the second property, 3% increase on the normal stamp duty rates. However if you are trying to sell the first property you now have 36 months instead of 18 to sell it and then claim back the additional 3% stamp duty you paid.
- From April 2017 contractors with limited companies who are engaged by the public sector will no longer be responsible for deciding if they are inside or outside IR35, the onus will shift to the public body itself or the recruitment agency if the contract was secured through an agency. In reality for public sector contractors this may mean that you simply have to provide more evidence that you are outside IR35 than you currently do.