Here are the key announcements made by George Osborne in the summer Budget on (8 July):
1) Tax-free personal allowance increased.
The amount people earn before they have to start paying income tax – will increase to £11,000 in 2016 to 2017.
2) Savings flexibility extended to stocks & shares ISAs.
Investors will be able to withdraw and reinvest cash held in stocks & shares ISAs without affecting their annual limits as of April 2016
3) Reforming dividend tax.
The dividend tax credit (which reduces the amount of tax paid on income from shares) will be replaced by a new £5,000 tax-free dividend allowance for all taxpayers from April 2016.
Tax rates on dividend income will be increased.
4) Family home taken out of inheritance tax.
Currently, inheritance tax is charged at 40 per cent on estates over the tax-free allowance of £325,000 per person. From April 2017, couples will be offered a £1m family home allowance so they can pass their home on to their children or grandchildren tax-free after their death. This will be phased in from 2017 to 2018.
The allowance will be gradually withdrawn for estates worth more than £2m.
5) Limits to paying into pensions.
The amount people with an income of more than £150,000 can pay tax-free into a pension will be reduced so that for every £2 of income they have in excess of £150,000, then their annual allowance is reduced by £1. Most people can contribute up to £40,000 a year to their pension tax-free.
6) Taxation of lump sum pension death benefits to beneficiaries
Will reduce from 45% to the recipient’s marginal rate of income tax (from April 2016), if the deceased is aged over 75 years; no tax to pay if under age 75 years. The 45% rule stays if paid into a trust.
7) Higher rate threshold will increase.
The amount people will have to earn before they pay tax at 40 per cent will increase from £42,385 in 2015 to 2016 to £43,000 in 2016 to 2017.
8) Corporation tax will be cut.
The main rate of corporation tax has already been cut from 28 per cent in 2010 to 20 per cent, in order to boost UK competitiveness but will fall further to 19 per cent in 2017, and then to 18 per cent in 2020.
9) Second hand annuities
Government delays second hand annuity market until 2017
10) Buy-to let breaks.
Mortgage interest relief would be restricted to the basic rate of income tax, phased in over four years from April 2017
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