Budget Update 2016

Mar 25, 2016   //   by Ralph   //   Latest News

SDLT surcharge for buy-to-let landlords.  As I mentioned in my January article from the 1st April 2016 there is to be a 3% SDLT surcharge on all residential property where the purchaser is not going to live in the property. This means that on a buy to let investment property of £150,000 there will be £5,000 SDLT payable rather than £500. This does not apply to commercial property. There will be no exemption for investors with significant property portfolios. The SDLT rates will apply to all purchasers including companies and funds.PF-to-let-signs_1115479c

SDLT on non-residential properties. The SDLT due on non-residential properties is to be brought in line with that for residential where it will be exempt up to £150,000 and 2% from £150,001 to £250,000 and 5% above that.

Business Premises Renovation Allowance.  This is to cease on the 5th April 2017 so anyone considering claiming this needs to have the work completed by then in order to receive the 100% capital allowance.

An extra £1000 allowance. From 6th April 2017 micro-entrepreneurs, and those receiving rental income of less than £1000 per year will be exempt from tax upon it. This is to simplify those doing a bit of “wheeling and dealing” on the internet and letting a car parking space etc. If your income is over £1,000 then you can deduct £1,000 from the gross and be taxed on the remainder or claim the actual expenses incurred.

Increase in cost of loans from own company. The rate of tax payable by a company for loans made to directors has been increased from 25% to 32.5% to reflect the new dividend tax of 7.5% and to stop company owners using loans as a more tax efficient way of withdrawing funds.

Reduction in Capital Gains Tax rates.  The Chancellor announced that the main rates of capital gains tax will fall from 18% and 28% to 10% and 20% respectively for all gains excluding those on residential property and carried interest. The new rates apply from 6th April 2016.

tax-169849-mVAT limits increased.  The new registration limit for VAT is £83,000 and for deregistration £81,000.

Increase in Insurance Premium Tax. The rate of IPT will increase to 10% on the 1st October 2016.

Tax free savings. From 6th April 2016 the first £1,000 (£500 for higher rate taxpayers) of interest is tax free. This could therefore be of an advantage where company directors have lent the company money. A reasonable interest rate could be charged, which would increase the tax free income available by up to £1,000.

The author Ralph Robson FCCA is based at TA Gittins & Company’s Wrexham office and can be contacted on 01978 264846 or via email on ralph.robson@tagittins.co.uk

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