Wealth planning

The 2016 Budget

Martyn Thornhill, Wealth Planning Director, discusses the recent Budget and reviews the latest changes

10/04/2016

Martyn Thornhill

Martyn Thornhill

Wealth Planning Director

George Osborne presented his eighth Budget on 16th March, when UK headlines were being dominated by other issues, principally the EU referendum, the US Presidential campaign and worries over the slowing world economy. This changed dramatically, however, when the Work and Pensions Secretary resigned from the government following cuts to disability benefits.

The chancellor has set himself a target of running a budget surplus by 2019/20, and whilst the UK economy appeared to be growing steadily, economic forecasts have become less optimistic. Against this backdrop, achieving the surplus will require cuts to previous expenditure plans.

Mr Osborne may have considered saving money by abolishing higher rate pension tax relief. Whilst pre-Budget rumours focused on this, in the end, tax relief on pensions remains unchanged. Savers were, however, encouraged with an ISA allowance increase and further incentives, such as a new Lifetime ISA.

There was a surprising reduction in the rate of capital gains tax. This rate reduction will not apply to capital gains on residential properties, which will inevitably disappoint property investors.

Encouraging business remains a key priority for the chancellor as he announced another reduction to corporation tax. Companies will now pay a corporation tax rate of only 17% with effect from 1st April 2020.

In terms of the proposed tax changes, this Budget is unlikely to be remembered as a headline event. Compared to the Budgets of March 2014 and July 2015, there were no revolutionary changes. In this Budget summary, we will look at the main aspects of personal taxation and highlight planning opportunities.

Summary of the personal taxation changes:

Income tax

Capital gains tax (CGT)

Inheritance tax (IHT)

Pensions

ISAs

Non-domiciliaries

Corporation tax

Statements concerning taxation are based on our understanding of the taxation law in force at the time of publication. The levels and basis of, and reliefs from, taxation may change. Readers should seek professional advice for their individual circumstances.

This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 12 Moorgate, London, EC2R 6DA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

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John Gordon

John Gordon

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James Gladstone

James Gladstone

Head of Wealth Planning
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