Chancellor Osbourne delivered his first Spring budget of the new Parliament earlier this week. He reported on “an economy set to grow faster than any other major advanced economy in the world”. Whilst this may be true, it is of great significance that the rates of projected growth in the UK for the remainder of this Parliament have been reduced quite considerably and it will now test all of the Chancellor’s financial wizardry to reach his stated aim of a budget surplus by 2020. What are the implication of this for all of us? In all probability, more years of austerity than previously expected lie ahead for the UK.
Much of what was included in the budget had been released in previous statements and so was not of great surprise. However, there were a few unexpected announcements and we will be digesting how these affect our clients in the coming days and weeks and getting ready to advise accordingly.
Of particular relevance to many people will be the following;
- The reductions in capital gains tax were not expected although it should be borne in mind that they will not affect most people selling a trading business nor anyone making a gain on a residential property which is not their main home.
- There has been much speculation over the last year around radical changes to the pension landscape. Whilst we did not see that in this budget we did see the introduction of lifetime ISA’s. Could this be the Chancellor “testing the water” on a different method of people saving for their retirement?
- We were already aware of the “dividend tax” which will come into force from 6th April 2016 at the rate of 7.5% on top of existing applicable rates of tax. We will be advising our clients on how this will affect them and ensuring that their dividends around this date are treated in the most tax advantageous way possible.
- The NIC Employment Allowance is being increased from £2,000 p.a. to £3,000 p.a. from April 2016. This should be claimed through your payroll and for any clients where Drummond Laurie operate the payroll we will do this as a matter of course.
- The Higher Rate Tax threshold will increase to £45,000 from April 2017. However, First Minister Sturgeon has already stated that this increase (and subsequent increases up to £50,000) will not be applied in Scotland. Will this be the first in a series of steps to make Scotland a higher tax place to live than rUK?
We hope that you find our attached budget summary of interest and should you wish to discuss any aspect of the budget further please do not hesitate to get in touch with me or one of your other Drummond Laurie contacts.
David Wheeler, Partner
t: 01324 441252
m: 075000 94375