Simon Littlejohns, Partner and Head of Tax at Birmingham chartered accountants and business advisers Friend Partnership Ltd breaks down the details within the latest Government budget.
Now that some of the dust has settled following Mr Osbourne’s recent budget announcement it has been possible to wade through the 50 odd press releases released as soon as he sat down.
In this blog I simply highlight some of the issues which may have gone unnoticed.
Buy-to-let investors have been targeted once again with two particular measures:
- The reduction in the rate of Capital Gains tax from 28% to 20% for higher rate taxpayers will not apply to vardenafil vs levitra the disposal of residential property; and
- The anticipated relaxation of the rules with regard to SDLT for bulk purchases of 15 or more properties has disappeared such that individuals and companies will now pay the extra 3% on additional properties regardless of the number of properties that are acquired.
Mr Osborne once again referred to his business tax road map aimed encouraging investment in the UK with its low tax burden for businesses.
The proposed reduction in the rate of corporation tax to 17% is welcomed as I am sure are the anti-avoidance measures which will ensure that those multi-national organisations best able to exploit weakness in UK and global taxation regimes have their UK tax planning curtailed somewhat.
Interestingly a number of commentators have suggested the possibility that the business tax changes are a precursor to the abolition of corporation tax in the UK. I personally think that would be a step too far at this stage. With falling corporation tax rates it could be argued that the tax take is reducing. However, with the anti-avoidance measures for multi-nationals the corporation tax receipts will undoubtedly increase. I can’t imagine for a moment that corporation tax would be abolished without something in its place – another transaction tax for instance. It will therefore be interesting to see over time where the business road map is ultimately taking the UK corporate tax regime.
The SDLT changes which were announced last year, in particular the 3% levy for second homes, have not been materially revised such that there are still anomalies for individuals buying and selling their main residence. In the Budget the only concession here was the extension in the time period to 36 months for the purchase and acquisition transactions. However, there is still a potential cashflow disadvantage for many homeowners who are unable to sell their main residence before they purchase their new main residence. It will be interesting to see how quick HMRC are at repaying the 3% SDLT which becomes repayable for transactions within the 36 month window.
There are a number of measures which were announced which will be of benefit to the smaller medium sized enterprises: increasing the thresholds for business rates, extension of Entrepreneurs’ Relief to long term investors and the abolition of Class 2 National Insurance Contributions.
The arrival of a ‘Lifetime ISA’ is an interesting development for younger taxpayers. Time will tell how attractive this is for such individuals given that there are a number of drawbacks in the legislation, as currently proposed. Might another pension vehicle be a step too far which will confuse individuals planning for their retirement? Again time will tell.
Finally on a positive note, the changes to the income tax personal allowance and higher rate threshold are to be welcomed and will undoubtedly give tax savings to a large number of taxpayers who fall out of the tax regime altogether or will no longer pay tax at higher rates.
For any footballers, and other professional sports men and women of course, reading this now is the time to get your testimonial sorted to secure a tax free amount of up to £100,000!
Please do not hesitate to get in touch if there are any issues announced in the Budget which are of concern.