The Personal Allowance is the amount of income you can earn before you start paying Income Tax.
The Personal Allowance is currently £10,600, it will rise to £11,000 for the 2016/17 tax year, and will then increase further to £11,500 in April 2017.
The point at which you pay the higher rate of Income Tax will increase from £42,385 to £43,000 in 2016 and to £45,000 in April 2017.
From April 2017, any person aged between 18 and 40 will be able to open a new Lifetime ISA. A maximum of £4,000 can be saved each year and a 25% bonus will be added to the saved amount by the Government.
Money saved into the Lifetime ISA accounts can be saved until you are over 60 and used as retirement income, or alternatively, you can withdraw it to help buy your first home.
The total amount that can be saved each year into all ISAs will be increased from £15,240 to £20,000 from April 2017.
Starting in April 2017, there will be two new Tax-Free £1,000 Allowances
Those who make up to £1,000 from occasional jobs, such as providing a lift share or selling goods they have made will no longer need to pay tax on that income.
The same applies to the first £1,000 of income from property for example renting a driveway or storage space
April 2017 will see small businesses, which occupy property with a rateable value of £12,000 or less, pay no business rates.
There will be a tapered rate of relief on properties worth up to £15,000.
The rate at which a person pays Capital Gains Tax has been lowered and so from April 2016
Higher Rate of Capital Gains Tax will be cut from 28% to 20%
Basic Rate Capital Gains Tax will be cut from 18% to 10%.
There will be an additional 8% to be paid on residential property and carried interest (the share of profits or gains that is paid to asset managers).
Capital Gains Tax on residential property does not apply to your main home, only to any additional properties you may have.
The main rate of Corporation Tax was cut from 28% in 2010 to 20% and it will now be cut again to 17% in 2020.
From 17 March 2016 the rates of Stamp Duty payable will apply to the value of the property over each tax band rather than the whole transaction value.
The new rates and tax bands will be;
– 0% on the first £150,000
– 2% between £150,001 and £250,000
– 5% above £250,000.
Buyers of commercial property worth up to £1.05 million will pay less in stamp duty.
Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5 million.
So, there you have it, a brief look at the Budget of 2016. If you have any questions or you’d like to get in touch, please feel free to complete the form below and we will be in touch as soon as we can.