Patricia Grant Bcom CA
Stephen Grant Bcom CA
Marita Scott BA(Hons) CA
The Chancellor had a little less “wriggle room” than was expected in this Budget leaving little scope for any dramatic changes in taxation. However, he usually comes up with something!
As previously announced the personal allowance for income tax has been increased to £11,000 for this tax year and will increase to £11,500 in the next. The basic rate band increases to £32,000 meaning that higher rate tax becomes payable on income over £43,000. No changes have been made in the rates of tax. Two new allowances are to be introduced from April 2017. Anyone with trading income or income from property of less than £1,000 will not need to declare the income or pay tax on it. The suggestion at the moment appears to be that anyone with income above this level will simply deduct the allowance when calculating their taxable profits. This sounds too good to be true. It would appear that, given the right combination of income, I could be entitled to my persoanl allowance, an allowance for trading income and property income, a dividend allowance, an allowance for interest, and an annual exemption for capital gains tax. In total this would currently exceed £30,000!
Capital gains tax
Probably the surprise package of this Budget was the reduction in the rates of CGT to 10% for basic rate taxpayers and 20% for higher rate taxpayers. This reduction does not apply in respect of gains on residentail property where the rates remain at 18% and 28% respectively. The annual exempt amount has been increased to £11,100.
Land and buildings transaction tax
The Scottish government followed the Chancellor’s lead in introducing a supplement of 3% to LBTT (our equivalent of stamp duty land tax) to purchases of second and subsequent residential homes. There is provision for a refund of tax paid where the second home is temporarily held while in the process of selling a previous main residence.