Conservative Budget 2016
Today was the day of the eagerly anticipated conservative budget 2016. Although not much of note in respect to property but here’s a summary of the business impacts.
Personal Allowance
The Personal Allowance is the amount of income you can earn before you start paying Income Tax. This is currently £10,600 and it will already rise to £11,000 in 2016n. In April 2017 it will now increase further to £11,500.
The point at which you pay the higher rate of Income Tax will increase from £42,385 to £43,000 in 2016 and to £45,000 in April 2017.
From April 2017, small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates.
Currently, this 100% relief is available if you’re a business that occupies a property (e.g. a shop or office) with a value of £6,000 or less.
There will be a tapered rate of relief on properties worth up to £15,000. This means that 600,000 businesses will pay no rates.
Capital Gains Tax
Capital Gains Tax is a tax on the gain you make when you sell something (an ‘asset’) that has gone up in value. It is paid at a basic or higher rate depending on the rate of Income Tax you pay.
From April 2016, the higher rate of Capital Gains Tax will be cut from 28% to 20% and the basic rate from 18% to 10%.
There will be an additional 8% point surcharge to be paid on residential property and carried interest. This is the share of profits or gains that is paid to asset managers.
Capital Gains Tax on residential property does not apply to your main home, only to additional properties (for example a flat that you let out).
Corporation Tax
The main rate of Corporation Tax has already been cut from 28% in 2010 to 20%, the lowest in the G20. It will now be cut again to 17% in 2020, benefitting over 1 million businesses.
Cutting business rates
From April 2017, small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates.
Currently, this 100% relief is available if you’re a business that occupies a property (e.g. a shop or office) with a value of £6,000 or less.
There will be a tapered rate of relief on properties worth up to £15,000. This means that 600,000 businesses will pay no rates.
New stamp duty rates for commercial property
The way stamp duty on freehold commercial property and leasehold premium transactions is calculated will change. Currently, these rates apply to the whole transaction value. From 17 March 2016 the rates will apply to the value of the property over each tax band.
The new rates and tax bands will be 0% for the portion of the transaction value up to £150,000. Remaining tax bands will be 2% between £150,001 and £250,000, and 5% above £250,000.
Buyers of commercial property worth up to £1.05 million will pay less in stamp duty.
Stamp duty rates for leasehold rent transactions will also change. With a new 2% stamp duty rate on leases with a net present value over £5 million.
What are your thoughts?