In today’s Budget George Osborne, the Chancellor of the Exchequer announced he was creating a Budget for the next generation and with slogans like ‘Making Britain fit for the future’, one wonders if the Chancellor was referring to his new sugar tax.  Here are just a few of the important changes that the Chancellor announced.

Corporation Tax

From April 2020 this will reduce to 17% which follows on from his earlier announcements concerning the reduction of Corporation Tax from 20% down to 18% and now this further reduction to 17%.  There will also be a number of anti-avoidance provisions which will mostly affect the larger companies.

SDLT

From tonight a new ‘slice system’ of Stamp Duty Land Tax will be applied to commercial property.  This will be similar to the system he introduced previously with regard to residential properties.  The new SDLT on commercial property will start at 2% for properties between £150,000 up to £250,000 and 5% for properties over £250,000.  This is likely to affect many property companies and property developers who are buying commercial land.

Capital Gains Tax

From 6 April this year Capital Gains Tax (except on residential property) will be reduced from 28% to 20% and for basic rate taxpayers that will come down from 18% to 10%.  He will also introduce a new 10% levy on certain business gains with a £10m lifetime cap.  There will also be other restrictive Capital Gains Tax measures introduced.

Insurance Premium Tax

This has gone up by a further ½% (to be earmarked for flood defence) in addition to the 3½% it went up last year.

Income Tax

The Tax Free Allowance will go up from April 2017 from £11,000 to £11,500 and from April 2018 the higher rate threshold will go up to £45,000, i.e. a person will be able to earn up to £45,000 before paying the 40% tax rate.

Sugar Tax

We all knew it was going to come sooner or later and the Chancellor stated that from 2018 there will be a new tax on soft drinks which contain sugar.  However beer, cider and whiskey duties remain the same.

Obviously ‘the devil is in the detail’ and once the detailed rules have been published by HMRC we will be able to see a better picture of how these new measures will affect people.  There seems to be with the changes in Capital Gains Tax and lower Corporation Tax quite a large scope for structuring one’s affairs in a way which will mitigate one’s exposure to tax.  For example, setting up of personal investment companies may become more attractive as it will have a lower Corporation Tax.

If you would like to discuss any aspect of today’s Budget, please contact our Private Client team at Jeffrey.Cohen@mackrell.com or Natalie.Payne@mackrell.com.