Chancellor George Osborne released his 2016 Budget today and below we have compiled a summary of the key points that may interest and affect you:
Main headlines
- Tax-free personal allowance to rise to £11,500 in April 2017
- The threshold at which people pay 40% tax will rise from £42,385 to £45,000 in April 2017
- New “lifetime” Isa for the under-40s, with government putting in £1 for every £4 saved
- Capital Gains Tax to be cut from 28% to 20%, and from 18% to 10% for basic-rate taxpayers
- Beer, cider, and spirits duties to be frozen
The key points at a glance
The state of the economy
- Growth forecast to be 2% in 2016, down from 2.4% in November’s Autumn Statement
- GDP predicted to grow 2.2% and 2.1% in 2017 and 2018, down from 2.4% and 2.5% forecast four months ago
- The UK will still grow faster than any other major Western economy
- A million jobs forecast to be created by 2020
- Inflation of 0.7% forecast for 2016
Personal taxation
- Further spending cuts of £3.5bn by 2020
- Debt to be £9bn lower in 2015-16 in cash terms
Personal taxation
- The threshold at which people pay 40% tax will rise from £42,385 to £45,000 in April 2017
- Tax-free personal allowance to rise to £11,500 in April 2017
- Capital Gains Tax to be cut from 28% to 20%, and from 18% to 10% for basic-rate taxpayers
- 1% rise in insurance premium tax
Pensions and savings
- Annual Isa limit to rise from £15,000 to £20,000
- New “lifetime” Isa for the under-40s, with government putting in £1 for every £4 saved
- The Money Advice Service, which has provided financial advice to consumers since 2010, is to be abolished.
Business
- Headline rate of corporation tax – currently 20% – to fall to 17% by 2020
- Annual threshold for small business tax relief to be raised from £6,000 to a maximum of £15,000, exempting thousands of firms
- £9bn to be raised by closing corporate tax loopholes and tax minimisation schemes
- Commercial stamp duty 0% rate on purchases up to £150,000, 2% on next £100,000 and 5% top rate above £250,000. New 2% rate for high-value leases with net present value above £5m. Effective from midnight
Health and education
- A new sugar tax on the soft drinks industry to be introduced in two years‘ time, raising £520m which will be spent on primary school sport
- Secondary schools in England to bid for new funding for extra activities like sport and art
- Plan for 25% of secondary schools to stay open after 15:30
- Plan for all schools in England to become academies by 2022
- Plans to enable all pupils to study maths until 18
Housing/infrastructure/transport/regions/energy
- New rail lines to get green light, including Crossrail 2 in London and the HS3 link between Manchester and Leeds
- £700m for flood defences schemes
Alcohol, tobacco, gambling and fuel
- Fuel duty to be frozen for sixth year in a row
- Beer, cider, and spirits duties to be frozen
- Excise duties on tobacco to rise by 2% above inflation
Welfare
- Disability benefits bill to increase in real terms
If any of the points mentioned have prompted you to consider a review of your financial future, be it housing or retirement planning, we are always available to help. You can reach us on 01273 736536 or info@numberonemortgages.co.uk.