March 2016 budget

Full details of the March 2016 budget are available on the governments Website .

Here’s our summary of the main points.

Dividend Tax

The new dividend tax is confirmed; you can read more about it here.

Personal Allowance

From 6th April 2016 the will increase by £500 further to £11,500 in April 2017.

Tax Higher Rate

From 6th April 2016 40% tax will kick in £2,000 later at £45,000.

Corporation Tax

The rate will reduce 17% by 2020.

Director’s Loan Accounts

From 6th April 2016 loans to directors not repaid within 9 months will be taxed at 32.5%.

Savings

A new allowance is being introduced for the 2016/17 tax year which means basic rate taxpayers won’t have any tax charged on the first £1,000 of savings interest. Higher rate taxpayers have £500.

Employment Allowance

This is increases to £3,000.

National Insurance Contributions

Class 2 National Insurance Contributions will be abolished from April 2018.

Entrepreneurs

The rules on closing a company using a Members Voluntary Liquidation are changing. It will not be possible to pay tax at 10% on company assets.

But, the rate of Capital Gains Tax for basic rate taxpayers has been reduced from 18% to 10%. For higher rate taxpayers the Capital Gains Tax rate will reduce from 28% to 20%.

Administration

The Government is looking to introduce “pay-as-you-go” tax accounts with flexible payment rules,. This means you can pay tax as soon as the income is received. More details will be released during the year.