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
NICs
- 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
ISAs
- 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
Uberisation
- £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
London
- Crossrail 2
Floods
- Increase in insurance premium tax
Excise duties
- Fuel duty remains frozen
- Tobacco duty increases
- Beer, cider and whisky duty frozen