17th March 2016

George Osborne presented a busy Budget yesterday, though the activity did not hide a significant deterioration in growth forecasts and so future tax receipts.

The improvement in forecasts only 3 months ago for the Autumn Statement was more than reversed, showing how uncertain such forecasts are and how sensitive they are to key assumptions – the downgrade in forecasts being in large part due to a reduction in expected future productivity growth, but also due to various increased global uncertainties.

Towards the end of the last year, the government issued the majority of the clauses, in draft, of the Finance Bill 2016 together with updates on consultations, in the now normal course of tax policy development. But our experienced and political Chancellor nevertheless had many significant new announcements, often rewarding smaller businesses at the expense of larger ones. Some of the changes apply immediately, some from April 2016, and others only take effect at a later date.

Our summary concentrates on the new tax measures announced yesterday, which include;

Personal Tax
• Increase in Income Tax tax-free Personal Allowance and higher rate threshold from April 2017
• Introduction of a Lifetime ISA for under 40s and Help to Save scheme for low income households

Business Tax
• Further reduction in the corporation tax rate
• Reforms to use of corporate tax losses from April 2017
• Abolition of Class 2 NIC from April 2018
• Consultation on possible reform of Substantial Shareholdings Exemption

Employment Taxes
• Introduction of employer NIC on some termination payments
• Office of Tax Simplification to look at simplifying NIC rules
• More anti-avoidance aimed at disguised remuneration schemes

Capital Taxes
• Reduction in the rates of capital gains tax from April 2016 (exceptions include second homes and buy-to-let properties)
• Changes to Entrepreneurs’ Relief, including extending this to shareholders in unlisted trading companies who are not employees or directors

Other Matters
• Changing calculation of Stamp Duty Land Tax on non-residential properties to be on band basis not slab basis
• Changes to business rates, reducing this for SMEs

It also includes comments on some of the previously announced changes which apply from April 2016, such as the changes to taxation of dividends.

As the Budget proposals may be subject to amendment before enactment in the final Finance Act, you should contact us before taking any action as a result of the contents of this summary.

Download our Budget 2016 summary

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