Cassons react to the 2016 Budget

Senior partner Ashley Hayman explains the changes to business rates announced in the Budget 2016.

“The Small Business Rate Relief Scheme is being greatly extended from April 2017 – and it will be made permanent. Relief will be doubled, from 50% to 100%. The current scheme applies to business property with a rateable value of £6,000 or less. That will double to £12,000, whilst between £12,000 and £15,000 there will be tapered relief. The changes will mean that 600,000 businesses will pay no business rates, whilst a further 50,000 businesses will benefit from the tapered relief. The threshold for the standard business rates multiplier will be raised from a rateable value of £18,000 to £51,000, reducing rates for 250,000 businesses. But there is a slight sting in the tail. The Government aims to introduce more frequent business rate revaluations. One can only assume that the revaluations will lead to more frequent rates increases – and may even drag some businesses out of eligibility for the Small Business Rate Relief Scheme.”


 Steven Greenwood, Director of Cassons Financial Planning Limited gives his initial thoughts on the introduction of the Lifetime ISA.

"The Chancellor is introducing a new Lifetime ISA from April 2017. Those who are under 40 can start a lifetime ISA, paying up to £4,000 pa. The Government will add a 25% bonus. This looks rather like a £5,000 contribution with 20% tax relief – but the bonus will not be added until the end of each year. And there will be no bonus after age 50. Funds can be withdrawn from age 60; or at any age to pay for a first home (subject to detailed rules); or in cases of terminal illness. But if funds are withdrawn before age 60 for any other reason the 25% bonus will be withdrawn. So too will any interest or investment growth on the bonus. And there will be a 5% charge on such withdrawals. The Chancellor did not explain the 5% charge. It looks like a simple penalty to deter withdrawal before age 60. This is clearly designed as a prototype new pension scheme, with limited tax subsidy on contributions and no tax on withdrawals after age 60. The age 60 limit is less flexible than current pension rules which allow lump sums to be taken tax-free at age 55."


 

Colin Tice, Tax Partner gives his views on the changes affecting buy-to-let landlords.

"The March 2016 Budget has confirmed stamp duty land tax (SDLT) changes announced in the Autumn Statement will apply to the purchases of second homes and buy to lets from 1 April, and the proposed exemption for larger investors (15 or more properties) will not go ahead, meaning that all investors can compete fairly. The new rates will not apply if someone replaces their main home, provided the old property is sold within 3 years (extended from the proposed 18 months). About 10% of residential property acquisitions will be subject to the new tax rates.

Commercial property acquisitions have new SDLT rules from 16 March so the charge is applied at the appropriate rate on each slice of the property sale price, rather than the band in which it falls, to bring it into line with the way residential property is charged. About 9% of commercial property acquisitions will face increased charges, but generally SDLT costs will fall.

The rate of capital gains tax is reduced to a main rate of 20% from 28% for disposals of most assets from 6 April 2016. But this reduction will not apply to residential property. Buy to let investors will not be impressed. The changes announced last year on restrictions to income tax relief on finance charges for residential property investors are to be phased in largely as previously announced."