2 / 4
Highlights from the 2016 Budget
The 2016 Budget contained a number of measures affecting businesses and individuals. Here we look at some of the
key announcements from the Chancellor’s latest Statement.
Business measures
Business rates
Following the business rates review, the Government has
announced that from 1 April 2017 it will permanently double Small
Business Rate Relief in England from 50% to 100%. It will also
increase the thresholds so that business properties with a rateable
value of £12,000 and below will receive 100% relief, while business
properties with a rateable value between £12,000 and £15,000 will
receive tapered relief.
Corporation tax
The Chancellor announced that corporation tax will be reduced by
an additional 1% from 2020. As a result, the corporation tax rate
will fall from its current rate of 20% to 19% for the financial years
beginning 1 April 2017, 1 April 2018 and 1 April 2019, and 17% for
the financial year beginning 1 April 2020.
Micro-entrepreneurs
Two new £1,000 allowances are to be introduced for property
and trading income, with effect from April 2017. Individuals with
property income or trading income below the level of the allowance
will no longer need to declare or pay tax on that income.
Those with relevant incomes above £1,000 can benefit by
simply deducting the allowance instead of calculating their exact
expenses.
Stamp Duty Land Tax (SDLT) for non-residential property
Following on from recent changes to SDLT and residential
properties, the 2016 Budget outlined further reforms to SDLT and
non-residential property. With effect from 17 March 2016, SDLT on
purchases of non-residential property will be charged at each rate
on the portion of the purchase price which falls within each rate
band. The new rates are now: 0% for the portion of the transaction
value between £0 and £150,000; 2% between £150,001 and
£250,000; and 5% above £250,000.
For leasehold rent transactions, SDLT is already charged at
each rate on the portion of the net present value (NPV) of
the rent which falls within each band. However, with effect
from 17 March 2016 a new 2% rate for rent paid under a non-
residential lease has been introduced where the NPV of the rent
is above £5 million. The new rates and thresholds for leasehold
rent transactions are: 0% for the portion between £0 and
£150,000; 1% between £150,001 and £5,000,000; and 2% above
£5,000,000.
Please note that these measures do not apply in Scotland, where
the Land and Buildings Transaction Tax has effect.
Personal measures
Personal allowances
The Chancellor announced that the income tax personal allowance
will rise to £11,500 from April 2017, at which time the threshold for
higher rate tax will also rise to £45,000 for those entitled to the
full personal allowance.
ISAs
In addition to the introduction of a new Lifetime ISA (see
page three), the Chancellor announced that with effect from
6 April 2017, the ISA annual allowance is set to increase from
£15,240 to £20,000.
Capital gains tax (CGT)
With effect from 6 April 2016, the higher rate of CGT has been
reduced from 28% to 20%, and the basic rate from 18% to 10%.
There is an 8% surcharge on these new rates for gains on
residential property. Private Residence Relief will continue to
ensure that an individual’s main home is not subject to CGT.
Please contact us to discuss how the Budget
announcements may affect you and your business.