Chancellor George Osborne spoke for just over an hour yesterday to announce the latest Budget to the nation. Here are some of the main financial planning areas covered:
Lifetime Isa is unveiled: The large ‘rabbit out of the hat’ from Osborne, the Lifetime ISA sees people under the age of 40 able to contribute up to £4,000 each year, with each individual getting a 25 per cent, or a maximum £1,000, bonus from the government. Individuals can continue saving until they reach the age of 50.
Savers will be allowed to use the money either to buy their first home or to save for their pension. Money can be withdrawn at any time, subject to a 5 per cent charge and forfeiting any interest or growth and the government’s bonus, says Osborne.
Money Advice Service is scrapped: The government admitted that the name of the service was mis-leading to consumers because it does not offer regulated advice (!).
Stamp duty exemption rules out for corporate buy-to-let investors: The Government ruled out an exemption to the new 3 percentage point raise in stamp duty for corporate investors, following the outcome of a consultation on the exemption, announced in the 2015 Autumn Statement. The new stamp duty rates come into effect on 1 April.
Capital Gains Tax is cut to 20%: Osborne cut CGT from 28% to 20% from April 2016. For basic rate taxpayers, CGT will fall from 18 per cent to 10 per cent. The changes will occur in three weeks’ time at the start of the new tax year.
Stamp duty is reformed for commercial properties: Residential house buyers were given a boost in 2014 with the removal of the ‘slab’ system for stamp duty tax, but commercial property buyers were left with the old system. However, the Chancellor has now brought commercial property into line with the new system. The change means that when a purchase passes a tax threshold, the higher rate applies to just the part above the threshold.
Isa limit is increased: The ISA limit will increase for everyone from the current £15,240 limit to £20,000 from April 2017.
Corporation tax is cut to 17 per cent: Corporation tax will fall to 17% in 2020 from its current 20 per cent rate. The tax was already due to fall to 19 per cent in April 2017 and 18 per cent by 2020, but this has now be accelerated.
Personal allowance and higher rate tax thresholds rise: From April 2017 both the personal allowance and the threshold for the rate of income tax will increase. The personal allowance will rise to £12,500 and the threshold for the higher 40 per cent rate of income tax will move from £42,835 to £45,000.
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