The chancellor made his 2016 Budget speech today and made a joke on pensions: "...we'll keep the lump sum and abolish the Liberal Democrats."

  • The world: worldwide productivity growth is decelerating. In the UK, the drag from the financial crisis has not eased. The International Monetary Federation warns of economic derailment. 
  • The UK: the Office of Budget Responsibility (OBR) estimates the UK's economic growth as 2.2% for 2015, 2% for 2016, 2.2% 2017 and 2.1% for three years following.
  • Government borrowing has not decreased as planned. 

Key announcements from the speech (full coverage of published documents will follow when they are released by HMRC)

Income tax 

From April 2017

  • The personal allowance increases to £11,500
  • The higher rate threshold increases to £45,000


  • From 2018 abolish Class 2 NICs for the self employed

Capital gains tax

From April 2016

  • Main rate reduced to 20%
  • Basic rate reduced to 10%
  • No changes for CGT on gains on residential property and carried interests


  • A lifetime ISA for the under 40s to fund pension/savings
  • £20k ISA limit for everyone

Corporation tax

Government to publish a new roadmap and level the playing field between big multinationals and small companies

  • Corporation tax to be reduced to 17% from 2020
  • Restrict interest deductions from April 2017, restricted to 30% with a group limit
  • Hybrid mismatch rules
  • Withholding tax on royalties
  • Modernisation of loss relief: 50% restriction of carried forward losses (25% for banking companies)

Online sales

  • Measures to ensure VAT not avoided by online sales


  • £1,000 allowance for micro online trading/selling services/property.

Business rates

  • Increase in small business rate relief

Stamp Duty Land Tax

  • Commercial property new regime from midnight 16 March 2016.
  • Residential property increased SDLT: will also apply to large investors.

Public sector pensions

  • Increase: employer contributions to increase.

Tax avoidance/evasion: action will be taken on avoidance by:

  • Personal Service Companies
  • Disguised remuneration rules
  • Transfer offshore of development profits
  • A cap exempt gains on employee shareholder status
  • Loans to participators subject to a 32.5% tax charge 
  • Termination payments will attract Employer NICs

Sugar tax

  • A levy introduced from 2018
  • 2 bands: excluding milk and fruit drinks

Climate change

  • Carbon taxes reformed

Petroleum Revenue Tax

  • To be abolished

"The Northern Powerhouse"

  • Introduction of Mayors
  • More rail


  • Crossrail 2


  • Increase in insurance premium tax

Excise duties

  • Fuel duty remains frozen
  • Tobacco duty increases
  • Beer, cider and whisky duty frozen