THE BUDGET 2016 SNOOZE-LETTER

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Chancellor George Osborne delivered his 8th Budget, stating "This Budget puts the next generation first".

Some of the points which we feel may affect you or your business are included below.

Income Tax & Personal Allowances

From 5th April 2016 the following apply:

Personal Tax Free Allowance    £11,000

Basic Rate Band - 20%     £32,000

Higher Rate - 40% on income over** £43,000

Additional rate - 45% on income over    £150,000

Transferable Tax Allowance (Marriage Allowance) £1,100

**Your personal allowance goes down by £1 for every £2 that your adjusted net income is over £100,000

National Insurance

National insurance rates and bandwidths remain the same for the 2016/17 tax year:

Class 1 (on employment)* - Payable at 12% on weekly earnings over £156

Class 2 (Self-employed) - £2.80 per week

Class 3 (Voluntary) - £14.10 per week

Class 4 (Self-employed on annual profits)* - £8,060 to £43,000 @ 9%
On Profits over £43,000 @ 2%

*Exemption applies if the State Pension age was reached by 6th April 2016

National Living Wage

The National Living Wage comes into force on 1st April 2016. All workers aged 25 and over are legally entitled to earn at least £7.20 per hour.

Corporation Tax

Corporation tax rates remain at 20% for the tax year to 31st March 2017.

The Chancellor has announced that this rate will fall to 19% from 1st April 2017 and fall to 17% from 1st April 2020.

Employment Allowance

The employment allowance against employer's NI contributions will increase to £3,000.

Sole director Limited companies are no longer entitled to claim the Employment Allowance against employers national insurance contributions.

Capital Gains Tax

The Annual Exempt amount remains at £11,100.

The next £32,000 is taxed at 10%.

Gains over £43,100 are taxed at 20%.

Private Residence Relief applies to your main home, which is not subject to CGT if you sell it.

Different rules apply to trusts and trustees, carried interest and gains on residential property, eg second homes or investment property.

VAT (Value Added Tax)

From 1st April 2016 the Standard Rate of VAT remains unchanged @ 20%.

The registration threshold has increased to £83,000, with the de-registration limit increased to £81,000.

Flat Rate Scheme limit remains at £150,000.

Annual & Cash Accounting Schemes limit remains unchanged at £1.35 million.

Lifetime ISA

The Chancellor has introduced the new Lifetime ISA - available from 6th April 2017.

From this date, any adult under 40 will be able to open a new Lifetime ISA. You can save up to £4,000 each year and will receive a 25% bonus contribution from the Government for every £1 that you contribute, up to the age of 50.

Funds can be used to save for a first home or for retirement.

Removal of Dividend Tax Credit

The old Dividend Tax Credit is being replaced by the new tax free Dividend Allowance, this gives you the first £5,000 of your dividend income TAX FREE.

If you feel that any of the above issues are likely to affect you and need more information, please get in touch.

email: info@numbercrunchingltd.co.uk

Phone: 01462 670 124

Mobile: 07884 036 667