Budget 2016 – key points

Some 600,000 small business to be taken out of business rates.

George Osborne has announced that some 600,000 small businesses will be taken out of business rates from next year.

Also approximately 250,000 firms will pay less in business rates  under the plans announced in the budget.

In the Budget it was confirmed that  Small Business Rate Relief (SBRR) would be doubled from 50 percent to 100 percent, effectively exempting properties with a rateable value of £12,000 or less, while the threshold for standard business rates would be raised to £51,000.

The Treasury’s “Red Book”, which gives further detail on measures announced in Budget speeches, said the combination of business rate changes would reduce projected business-rates revenue by £6.7bn over the next five years.


Personal allowances

The Personal Allowance will increase to £11,500, and the higher rate threshold will rise to £45,000 in April 2017

The Personal Allowance is the amount of income you can earn before you start paying Income Tax. This is currently £10,600 – it will already rise to £11,000 in 2016, and will now increase further to £11,500 in April 2017.

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.


Corporation tax (CT) rate

Last year the CT rate from 20% to 19% for the financial year beginning 1 April 2017 And  18% for the financial year beginning 1 April 2020.

From 1 April 2020 the CT rate will now be to 17% instead of 18% .



It was confirmed that from 1 April 2016 the dividend rates will be as follows:

  • 0% for the first £5,000
  • 7.5% for dividends falling within the basic rate band 32.5% for dividends falling within the higher rate band 38.1% for dividends falling within the additional rate band.


Reduction in Capital gains tax. (CGT)

Currently CGT is charged at 18% for individuals who are basic rate taxpayers, and 28% for higher rate taxpayers.

There will be a reduction to 10% for basic rate taxpayers and 20% for higher rate taxpayers from 6 April 2016.

There will be an additional 8% surcharge on gains arising from ‘ carried interest’ or from residential property unless private residence relief applies.

The reduction in the capital gains tax rates to 20% and 10% was unexpected.


Changes to loss relief

There were changes to loss relief so that losses arising on or after 1 April 2017 to make loss relief more flexible from 2017.


Entrepreneur relief (ER) changes

From 6 April 2016 ER will be extended with the introduction of an investors’ relief for external investors in unlisted companies.

This relief will encourage long term investment in unlisted trading companies.

Investors under these rules don’t have to be an officer or employee of the company.


Entrepreneur relief (ER) on incorporation

An individual will now be able to claim ER in respect of gains on the disposal of goodwill to a company where the individual owns less than 5% of the shares and less than 5% of the votes in the acquiring company. Other changes were made to allow flexibility in restricted circumstances for holdings of over 5 % where the incorporation is part of a sale to a new independent owner.