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George and his briefcase prompted our first Budget and Bubbly event recently which was a raging success if we do say so ourselves. If you were there, you rock, and if you weren’t, this blog will tell you the important points you need to know for right now and for upcoming years.

Personal Tax

BB• The personal allowance is going up by £500. (Every little counts, right?) The 2017/18 allowance will be £11,500.

• The higher rate tax threshold is going up by £2,000. The 2017/18 threshold will be £45,000.

• As of April 2016, the dividend tax credit of 10% got the axe and a dividend tax was introduced. However, the first £5,000 of dividend income will be tax free. After that, the rates will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers, and 38.1% for additional rate taxpayers.

• Class 2 National Insurance contributions for the self-employed will be no more from April 2018.

• £1,000 allowances for property income and trading income allowances will be introduced in April 2017.

• Landlords’ interest relief will be restricted to the basic rate of income tax from 6 April 2017, and the ‘wear and tear’ allowance has been replaced with a new relief enabling landlords to deduct replacement furnishings costs.

Pensions, Savings, & Investments

• ISA ISA BABY - from April 2017, so long as you’re an adult under 40, you’ll be able to have a Lifetime ISA, allowing you to save up to £4,000 each year and a 25% bonus from the government for every £1 put in. The standard ISA investment limit will increase to £20,000.

• ISA funds will be available to purchase a first home - with the government bonus - from 12 months after opening the account. They can be withdrawn from age 60 for retirement use (which, we’re told, is when life really starts).

• A personal savings allowance now exists to remove tax on up to £1,000 of savings income for basic rate taxpayers and £500 for higher rate taxpayers.

Business Tax

• Corporation tax will go down (hurrah!) to 19% in 2017 and 17% in 2020.

• Business will be able to carry forward any corporation tax losses incurred from 1 April 2017 and set against other income.

• Capital allowances on business cars will include an extension of the current first year allowances on low emission cars to April 2021.

• The annual investment allowance of £200,000 is to be ‘permanent’. (Though pinch of salt may be required...)

• The new mandatory National Living Wage is now in force - £7.20 per hour for workers 25 and over. Come October 2016, workers aged between 21 and 24 must be paid the new National Minimum Wage of £6.95.

• The VAT registration threshold is to rise to £83,000, with VAT de-registration rising to £81,000.

• From April 2017, when a business engages workers through their own company, that business will be responsible for determining the rules that apply and for paying the right amount of tax.

Capital Tax

• Capital gains tax isn’t gaining; it’s gone from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers.

• There’s an 8% capital gains surcharge on these new rates for carried interest and gains on residential property.

• The 10% entrepreneur’s relief on goodwill (the one that was previously abolished) is back on, with retrospective effect. This means a business owner pays 10% tax on the goodwill in which they sold to their company, and can draw down this total amount of goodwill introduced, tax free, from their new company.

• A 3% stamp duty land tax has been introduced for purchases of ‘additional residential properties’ - which even includes furnished holiday lets.

• Non-residential SDLT now works on a ‘slice’ system (which doesn’t involve cake) with the following rates:
o £0-150,000 - 0%
o £150,001-350,000 - 2%
o 250,001+ - 5%

We now realise we should have called this blog ‘Budget and Bullet Points’. We hope the breakdown was helpful! Got any questions? We’ll (most probably) have the answers. Give us a call on 02921 303888

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