• Confirming the point at which people pay tax (National Insurance has lower thresholds which are unchanged) from 6 April 2016 rises to £11,000
• Further reducing Corporation Tax to 17% by 2020
• Confirming marriage allowance at £1,100 for 2016/17
• Increasing the ISA limit to £20,000 per annum from 6 April 2017
• Implementing a new Lifetime ISA with a 25% government backed bonus for adults under 40 who save upto £4,000 per annum
• Confirming the Annual Investment Allowance is now permanently £200,000
• The scrapping of Class 2 National Insurance (currently £2.80 per week) 6 April 2018
• Scrapping this year's planned fuel duty increase which should help keep costs down!
• Reducing Capital Gains Tax to 10% for basic rate tax payers and 20% for higher rate tax payers - this does not apply to residential property

I will be uploading a new digital version of my 2016/17 tax card to my refreshed website by 17.00 tomorrow, so you're welcome to download it to your device.  In the meantime the new tax pages feature business and personal tax rates for 2016/17.  Alternatively the tried and tested hard copies will be available later this week!

As always, this newsletter is designed to draw attention to specific topical issues and is in no way intended to provide advice tailored to your business - advice must always be sought before acting on any item featured.

Best wishes
Nigel

If you're in business, then I'm sure you've tuned in already to the  Budget 2016 today. What does it all mean though, I hear you ask! Well here are a couple of nuggets to help explain the budget for business in a little more detail.

​The £200,000 Annual Investment allowance is now permanent.  To recap, this gives up front tax relief for the vast majority of investments made by clients.  Don't forget this applies to vans but not to cars - some 'green' cars continue to benefit from a 100% First Year Allowance. 

​The £3,000 NI employer's NI exemption comes into force from 6 April 2016.  It no longer applies to single director single employee companies and should no longer be claimed.  New travel and subsistence rules also come into force and these will be the subject of my next newsletter.

The living wage commences 6 April 2016.

It's also worth remembering that over the next year or so small employers will be required to provide a pension to the vast majority of employees so the combination of the increase in minimum wage and the impact of the cost of providing pension schemes need to be factored in.  More information is available via the Pensions Regulator's website.  You can also check your staging date by using your PAYE reference.

​The VAT registration threshold will rise to £83,000 with effect from 1 April 2016.

​My software should be updated in the next few days and I'm now taking bookings for 2015/16 tax returns.  Those wishing to have an early view of their tax affairs are welcome to get in touch to book an appointment!

​The point at which people will pay income tax rises to £11,000 for 2016/17 which is some £400 higher than the current year.  This increases to £11,500 from 2017/18.  The Chancellor has continued to increase thresholds for those on the higher rate tax and the point at which higher rate tax will be paid from 6 April 2016 will be £43,000 and £45,000 from 6 April 2017.  The thresholds at which people pay National Insurance have not risen as with employers National Insurance kicking in at £156 per week.  This is very similar for those who are self employed with the point at which the 9% class 4 contributions become due being £8,060.

A new dividend tax commences 6 April and this was the subject of a detailed newsletter a few months ago.  The first £5,000 is tax free and any dividends above this are taxed at an additional 7.5%.  Planning around tax year end and declaring dividends properly and 'not just taking drawings' is critical as this is likely to be an area where HMRC are aggressive.  He also took the opportunity to close the final 'loophole' to manage dividend income by increasing tax on 'directors' loans to 32.5%.

In recent months more and more clients have bought a second property as an investment and are considering more properties.  As a reminder when you let property it needs to go onto your Self Assessment tax return even if you make a loss, as HMRC are getting pretty skilled at spotting let properties!  This also applies to making sure you complete the Capital Gains Section of your tax return when you come to sell it!

There have been subtle changes in the way let properties are taxed over recent years and more are to come:

• Unfurnished Properties - The renewals basis for things like white goods was abolished 6 April 2013 for unfurnished property leaving landlords with no relief against expenditure on things like fridges and cookers (unless built in) - ironically they could be rented and this would be allowable!

• Furnished Properties (remember these properties need to be ready to move into - not just a table and a bed!) - Landlords currently enjoy a 10% wear and tear allowance on rents received. This will be abolished from 6 April 2016 and landlords will only be allowed to claim the actual amount of any items replaced

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• All properties - at present full tax relief is available for interest on a loan used to fund a property or improvements.  From April 2017, tax relief on property loans (including mortgages on single properties) will be restricted so that by 2020, interest will not be an allowable expense but it will receive tax relief at 20%.  For those people paying 40% with high mortgages some careful planning will be required

• Rent a room - good news here this rises to £7,500 from April 2016

For more information or to see how this may affect you or your business, contact me for details