George Osborne delivered the first Conservative Budget for 18 years – ‘a Budget for the working people of Britain’. The announcements today will impact on advisers and their clients. There is a lot of detail behind the announcements and over the course of the afternoon the Gabelle team will work through the detail, but meanwhile here are some highlights:
Overhaul of dividend taxation
From 2016 the dividend system will be reformed so basic rate taxpayers will pay 7.5% tax on dividends (subject to the £5,000 allowance announced for savings income in the last Budget). Higher and additional rate taxpayers will pay tax at 32.5% and 38.1% respectively. Pension funds and ISAs will continue to receive dividends tax free.
Radical changes were announced and these will be introduced from 2017.
- An individual who has been resident in the UK for 15 out of the last 20 years will be taxed on their worldwide income and gains.
- Non-domiciled individuals with UK residential property in overseas structures will no longer avoid a UK IHT charge.
- Individuals born in the UK to UK parents will no longer be able to claim non-domicile status if they leave the UK but then return and take up residency.
From 2017 an additional £175,000 allowance will be introduced where the family home is passed to children or grandchildren on death. This means that a couple will be able to pass up to £1m to the next generation without an IHT charge.
Buy to let interest restriction
Interest relief on rental property will be restricted to the basic rate of tax. The restriction will be phased in over four years, starting from April 2017.
From April 2016 the employment allowance will not be available where the director is the only employee in the company. For other businesses the allowance will be increased to £3,000.
Corporation tax will be reduced to 19% in 2017 and further reduced to 18% in 2020.
National Living Wage of over £9 an hour by 2020
From April 2016, a new National Living Wage of £7.20 an hour for the over 25s will be introduced. This will rise to over £9 an hour by 2020.
As we work through the detail we will update our website during the afternoon so keep watching!