On 16 March, George Osborne, Chancellor of the Exchequer, read the Budget Statement for the 2016/17 tax year and beyond. The March Budget was directed at future generations and continuing the national recovery.
State of the economy
- The UK growth rate has been revised down from 2.4% to 2.2% in 2015/16, 2.0% in 2016/17 and 2.2% in 2017/18 followed by 2.1% up to 2020.
- Unemployment is at its lowest level since 1974, with an additional 2 million jobs in the economy.
- Inflation is predicted to be 0.7% in 2016 and 1.6% in 2017, which is still within the target of 2% CPI.
- The deficit will decrease from 2.9% in 2016 to 1.9% in 2017. It will reduce further, to 1.0%, in 2018 and then move into a surplus from 2019.
- Duty rates on beer, cider and whiskey will be frozen. All other alcohol duty rates will increase with inflation.
- There will be no increase in the fuel duty rate.
Personal and business taxation
- Personal tax allowance to increase to £11,000 from April 2016 and £11,500 from 2017.
- The 40% (40p) tax threshold is set to rise to £45,000 from £42,385 in 2017.
- Class 2 National Insurance will be abolished for the self-employed from 2018.
- The main rate of Corporation Tax will drop to 17% for all businesses from 2020.
- The threshold for small business rate relief will increase from £6,000 to £15,000, and the higher rate will be increased as well from £18,000 to £51,000.
- More scrutiny on public sector workers using Personal Service Companies.
- Effective from midnight tonight, commercial stamp duty will be set at 0% on purchases up to £150,000, 2% on the next £100,000 and 5% top rate above £250,000.
- There will also be a new 2% rate for high-value leases with net present value above £5 million.
- Insurance Premium Tax to increase by 0.5%.
- Sugar tax levy to be introduced on the soft drink industry, the proceeds of which will fund school sports initiatives.
Saving, investments and pensions
- The ISA tax-free limit will be raised to £20,000 from around £15,000.
- From April 2017 a new Lifetime ISA for those under 40 will be introduced. As part of this ISA the government will contribute £1 for every £4 you save. This government bonus is valid for every year until you turn 50.
- Capital Gains Tax to fall from 28% to 20% for higher tax rate payers; and from 18% to 10% for lower tax rate payers. However, the Capital Gains Tax on residential properties remains unchanged.