The 2016 Budget at a glance

Today, Chancellor George Osborne announced a new Conservative Budget that he said would focus on the long term, and “put the next generation first” to help make the UK “fit for the future”.

Our specialist tax and VAT partners from around the UK watched the announcement and have produced an ‘at a glance’ list of the main proposals, to help you digest the information that is relevant to you.

They have also provided their immediate reactions to some of these proposals, which you can view here.

Economy

  • Growth forecasts revised down to 2% in 2016, from 2.4% in November’s Autumn Statement, 2.2% in 2017, and 2.1% for the following three years
  • UK still set to grow faster than any other major Western economy
  • Public spending to be cut by an extra £3.5bn a year by 2019/20
  • Borrowing down from £1 in every £4 spent by the Government to £1 in every £14
  • Inflation forecast at 0.7% this year and 1.6% next year
  • One million jobs forecast to be created by 2020

Business

  • Corporation Tax to fall from 20% to 17% by April 2020
  • £12bn to be raised by 2020 from tackling tax avoidance and evasion.  The red book is likely to have substantial detail on tax avoidance, including personal services, disguised remuneration and Capital Gains Tax (CGT) on employment
  • £9bn to be raised by closing Corporate Tax loopholes and tax minimisation schemes
  • Small business rate relief rateable value threshold is set to increase from £6k to £15k
  • Taxing loans to shareholders from companies will be increased to 32.5% in line with increased higher rate of taxation on dividends (7.5%)
  • New progressive stamp duty rates for commercial property from 17 March 2016, with rates to be reduced for lower bands from midnight tonight

Personal taxation, pensions and savings

  • Tax-free personal allowance to rise to £11,500 from April 2017
  • CGT to be cut from 18% to 10% for basic-rate taxpayers, and from 28% to 20% for higher rate taxpayers (excluding gains on residential property)
  • Annual ISA limit up from £15k to £20k
  • New lifetime ISA for under 40s, with the Government boosting savings by 25%
  • 40% tax threshold to rise from £42,385 to £45,000 in April 2017
  • Abolition of Class 2 National Insurance Contributions for self-employed
  • Tax-free pension lump sum to continue

Education reform

  • Plan for all schools in England to become academies by 2020
  • £500m to ensure national ‘fair funding’ formula for schools in England
  • Plan for 25% of secondary schools to stay open after 15.30
  • Plan to teach maths to every child until 18 years of age.

Health

  • New sugar tax on the soft drinks industry to be introduced in 2018, to help battle child obesity
  • Sugar tax will raise £520m which will go towards helping schools’ sports schemes and extending the school day

Oil & gas

  • £1bn of support for the oil and gas industry in light of falling oil prices
  • Supplementary charge for oil and gas producers to be halved from 20% to 10%
  • Petroleum revenue tax to be effectively abolished

Infrastructure

  • HS3 rail link between Manchester and Leeds will go ahead
  • Severn crossings toll fee to be halved from 2018
  • Government will commission Crossrail 2 linking North and South London
  • £700m boost for flood defences
  • £13m for Hull to make a success of its 2017 status as UK City of Culture

Devolution

  • New powers over Criminal Justice to be devolved to Greater Manchester
  • Greater London Authority to retain all business rates from April 2017

Duty

  • Fuel duty frozen for the sixth year in a row
  • Beer and cider duty frozen
  • Excise duties on tobacco to rise by 2% above inflation

We will also be issuing a complete summary of the 2016 Budget tomorrow, which will offer a clear and concise commentary of the main Budget proposals, focusing on the issues pertinent to you, your family and your business.