This was the third Budget within the space of 12 months. It threatened to be the most difficult of the trio because of constraints imposed by June’s EU referendum and disappointing
economic numbers. Nevertheless, the Chancellor managed to produce several surprises, including net tax cuts in 2017/18 and 2018/19 before reaching his often repeated goal of a budget
surplus in 2019/20. Although the spectre of pension reforms had disappeared before the Chancellor rose to his feet, he did announce something very similar to a pension ISA in the form of a new Lifetime ISA for the under-40s, starting in April 2017. Savers will also benefit from a range of other measures, including an increase in the main ISA limit to £20,000 in 2017/18, a reduction in the rates of capital gains tax and an extension of entrepreneurs’ relief to external investors in unlisted companies.
The personal allowance and higher rate threshold for 2017/18 were given significant increases – to £11,500 and £45,000 respectively. Businesses will welcome the long-awaited business rates reform and a 17% corporation tax rate from 2020.
- The launch of a new Lifetime ISA from April 2017 for adults under the age of 40, with a maximum contribution of £4,000 a year and a 25% bonus. The standard ISA investment limit will rise to £20,000 at the same time.
- A cut in the main rates of capital gains tax from 2016/17 to 20% for higher and additional rate taxpayers and 10% for other taxpayers. However, the existing rates will continue for gains on residential property and carried interests.
- An increase in the personal allowance for 2017/18 to £11,500 and the higher rate threshold to £45,000.
- An extension of entrepreneurs’ relief to cover long term external investors in unlisted companies.
- Two new £1,000 tax allowances for property income and trading income, starting in April 2017.
- A cut in the corporation tax rate to 17% in 2020 and greater flexibility in the use of tax losses by smaller companies.
- A restructuring of stamp duty land tax on commercial properties.
- A major revamp of business rates, permanently doubling the small business rate relief.
- The abolition of Class 2 National Insurance contributions for the self-employed from 6 April 2018.
Download The Budget Summary 2016
Feel free to download our Budget Summary for 2016 and find out what to expect.