A summery Budget for some

The Summer Budget was greeted with a warm welcome by some but no doubt received a frosty reception from others. We look at the winners and losers from the announcements on a scale of ‘what’s hot and what’s not’.

  Key Announcement Winners and losers
Hot, Hot, Hot
Personal allowance increase
to £11,000 in 2016/17
The personal allowance continues to increase and at a
faster rate than promised in the March Budget. Nearly
300,000 working individuals will be left with a warm
glow after this measure will take them out of the charge
to income tax altogether.
 
An exemption from IHT for
many family homes
The hotly anticipated IHT exemption for family homes
that are passed down to direct descendants (children
and grandchildren etc.) will come in from April 2017.
An additional allowance of up to £350k per couple will
be given by 2020/21 with provisions also included
protecting those wishing to down size.
Warm front
CT rates to reduce to 19% in
2017 and 18% by 2020 and
Employment Allowance to
increase to £3,000
Reducing corporation tax and employer NIC bills can
only be warmly received by companies. The only slight
reservation is whether the new Living Wage could wipe
out these benefits for some.
 
Annual Investment
Allowance (AIA) set at
£200,000 from
1 January 2016
Good news for businesses – although lower than the
current £500,000 AIA it is much higher than the £25k
originally announced and provides certainty by fixing it
for at least the next five years. The winter spending
spree that might have been planned on capital
expenditure could now become less crucial.
Wintry Breeze
Accelerated CT payment
dates for large companies
This announcement will rain on the parade of the
bigger companies as tax payments will be accelerated
where chargeable profits are greater than £20m.
 
Reform of the taxation of
dividends
The current tax credit will disappear into the sunset in
favour of tax free dividends up to £5,000. The tax rates
in excess of this will be 7.5% (basic rate), 32.5% (higher
rate) and 38.1% (additional rate) from April 2016.
There could be winners and losers here and it will be
an essential consideration when looking at next year’s
remuneration strategy.
Chilly
Wear and Tear allowance
withdrawn from April 2016
Landlords of furnished residential properties will be left
feeling cold if they do not replace the furnishings of
their rental properties on a regular basis. The 10%
straight deduction of rental profits will be replaced with
actual expenditure from April 2016.
 
Restrictions to pension
annual allowance from April
2016
There will be a chill in the air for additional rate
taxpayers who will receive a reduced pension annual
allowance tapered from £40,000 to as low as £10,000
for those with income over £210,000.
Freezing
No goodwill amortisation
relief for companies on new
acquisitions from 8 July 2015
A further blow against the benefits of incorporation,
leaving sole traders and partnerships with a foggy
outlook on the best structure to carry out their business.
 
Restriction for landlords on
tax relief for mortgage
interest payments to basic
rate tax
To be phased in from 2017 over a four year period but
will be a lightning blow for higher rate taxpayers with
mortgages on their rental properties.

 


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