Capital Gains Tax
- The higher rate of CGT for most assets will be cut from 28% to 20%. The basic rate of CGT will be cut from 18% to 10%. However, it should be noted that the will be an 8% surcharge applied to gain on residential properties.
- Entrepreneurs’ relief has been extended to longer term external investors in unlisted companies. External investors will be subject to CGT at 10% on newly issued shares purchased on or after 17 March 2016, provided they are held for a minimum of three years from the 6 April 2016.
- The rate of corporation tax will be cut to 17% from 1 April 2020 and, as announced in the Summer Budget, to 19% on 1 April 2017.
- The rate of tax on loans to participator of a close company (S455 tax) will increase from 25% to 32.5% for loans made on for after 6 April 2016.
- Annual Investment Allowance (AIA) has been set at a stable level of £200,000 for all qualifying investment in plant and machinery made on or after 1 January 2016.
Stamp Duty Land Tax (SDLT)
- SDLT on non-residential property will be payable on the proportion of the transaction value which falls within each tax band. The new rates will be; 0% between £0 – £150,000, 2% between £150,001 – £250,000 and 5% over £250,000.
- A new 2% rate for leasehold rent transactions where the net present value of the lease is over £5 million will also be introduced.
These charges will take effect on 17 March 2016 but transitional rule will ensure that contracts which have exchanged but not completed do not lose out they can elect to use the new or the old regime.
- In the Autumn statement it was announced that a higher rate of 3% on SDLT would apply to purchases of additional residential properties from 1 April 2016. For those moving house from one main residence to another, it has been confirmed that the period of 18 months will be increased to 36 month and this will commence from 25 November 2015.
Employee Shareholder Status (ESS)
- The budget introduces an individual lifetime limit of £100,000 on gains eligible for CGT exemption through ESS. This limit will apply to arrangements entered into on or after 17 March 2016, and will not apply to arrangements already in place.
- Payments of a royalties that are made to a connected person and withholding tax is not due under a Double Taxation Agreement (DTA), may now be subject to withholding tax if the main purpose of the arrange is to obtain a tax advantage by virtue of a provision of a DTA.
- Self employed traders will, from April 2017, be entitlement to two new allowances of; £1,000 on trading income and £1,000 of property income.
- The Employment Allowance which offers a reduction of employers’ National Insurance will increase to £3,000 in April 2016.
- Class 2 National Insurance Contributions (NICs) will be abolished from April 2018.