So today George Osborne stood and delivered his eighth budget.
The backdrop both economically and politically for this budget is extremely interesting with the EU referendum also looming the environment can certainly be described as somewhat uncertain. The 2015 autumn statement was delivered in completely different circumstances with the Chancellor able to positively adjust his spending plans, etc. However we are also in an environment where we have seen the entrepreneurial and owner manager sector pursued for additional taxes including the forthcoming rises in dividend tax. It was therefore with nervousness that we did sit down to listen to his budget statement.
To begin with there was a lot of political posturing and scaremongering that the figures were only valid as long as the UK stays in the EU. We would have no information on how the outlook would be in the case of a brexit. It seems inappropriate that the Chancellor took this opportunity to abuse his political position.
Overall there were a few surprises but it should be remembered many tax rises which are due to hit entrepreneurs have already been announced.
If you want to learn more we are holding a seminar on the 22nd of March at 5pm at the Italian Villa, Compton Acres and if you would like to attend please email email@example.com
In the meantime, if you have not yet had the opportunity to catch up with the key announcements from the budget we have summarised them below for you:
Economic and Spending Announcements
- UK growth revised downwards to 2% for 2016 (previously 2.4% in just November). Further revised projections of 2.2% for 2017 and 2.1% there after. This was put down to the weaker global economy.
- The Chancellor is sticking to the plan of achieving a surplus by 2019/20, this is expected to be £10.4bn. However, this will require a £30bn swing from the previous year.
- Annual borrowing as a percentage of GDP has increased where the economy hasn’t grown as quickly as anticipated. However, in £ terms the deficit is lower.
- 150,000 more jobs have been created than originally anticipated.
- National debt as a percentage of GDP is 82.6% for 2016/17 before falling to 74.7% by 2021.
Personal Taxation Announcements
- Extension of Entrepreneurs Relief for shareholders who invest in businesses longer term – no longer needing to be an employee, although shares need to be held for three years.
- Capital gains tax will fall from 6 April 2016, from 28% to 20% for higher rate tax payers and 18% to 10% for basic rate tax payers.
- The personal allowance will rise to £11,500 from April 2017. The higher rate tax bracket will also rise to £45,000 from April 2017.
- Class 2 NIC will be abolished from 2018, saving around £130 per year.
Business Tax Announcements
- Corporation tax will fall to 17% by 2020
- More targeted measures for big business to stop them gaining advantages over smaller UK business.
- Business Rates reliefs will be increased and bands extended so more businesses qualify.
- Commercial Property will now have stepped stamp duty, as per residential property, rather than set rates. Properties over £250k incur a 5% charge.
- Company Car tax rates to increase towards April 2019
- Loans to Directors/Shareholders from their own company (known as section 455 tax) will increase from 25% to 32.5%.
- Insurance Premium Tax increased but by far less than reported last week, with a 0.5% rise.
- A new sugar tax on soft drinks manufacturers to fund longer school days and sport activities.
- A savings ISA the Government will also contribute towards. Is this the beginning of the end of pensions as we know them?
- No rise to Fuel Duty, Beer or Spirits
- £12bn will be raised via tax evasion and avoidance. Personal Service Companies are in the firing line, but limited detail on this so far.
The big question is can the Chancellor make his sums add up by 2020?