Spoiler alert: If you haven’t seen the actual announcement from 16 March 2016, we highly recommend that you grab a bag of popcorn and see the announcement starring George Osborne in full technicolour. If you’d prefer not to do that, read on for the Cliff Notes…
On 16 March 2016 George announced that for 2017/18 the higher rate Income Tax threshold would be raised to £45,000 and the personal allowance would be increased to £11,500.
To SNP or not to SNP…
On 22 March 2016 Nicola Sturgeon, the leader of the SNP, said that if elected the SNP would not adopt UK government plans to raise the starting point at which workers in Scotland pay the 40p tax rate to £45,000. Ms Sturgeon did make clear however that the 40p threshold would rise by the CPI inflation rate, taking it from £43,000 to £43,387. We at DT suspect they might go with a number that’s a wee bit rounder.
Capital Gains Tax
George announced that with effect from April 2016 Capital Gains Tax will be reduced by 8 percentage points from 28% to 20% for higher rate tax payers and from 18% to 10% for basic rate tax payers. Residential property owners, however, are out of luck because gains made on residential property will remain chargeable at the old rates. It seems George has set his sights on residential property owners of late, with this as well as 3% higher rates of SDLT on additional property, and non-deductibility of finance costs.
Following significant speculation that there would be changes to the Income Tax relief available on pension contributions, there was no such change announced in this Budget. Pension lump sums will continue to remain. Remember though, the Single Tier State Pension kicks in next week. Expect some screen changes in Dynamic Planner.
The ISA limit will be increased from £15,240 to £20,000 for 2017/18.
In this budget one of the biggest announcements was the Lifetime ISA.
The new Lifetime ISA is for under 40s and will allow people to save up to £4,000 (post-Income Tax) each year and receive an additional 25% bonus from the Government (the equivalent of Basic Rate relief). Savings, including the Government bonus, can be accessed to buy a first home, and in retirement.
An exit, an exit, my Kingdom wants a (Br)exit…
On 23 June 2016, the British people will be asked whether they think the UK should remain a member of the EU or leave, in the first referendum on the UK’s membership of the EU since 1975.
Budget Trivia: Did you know…?
By tradition, the Chancellor, unlike Ministers at the despatch box at any other time of the year, may drink alcohol during the Budget speech if they wish.
George Osborne has chosen to drink mineral water, as did the previous Chancellor Alistair Darling.
Other Chancellors have chosen mineral water (Gordon Brown), whisky (Kenneth Clarke), spritzer (Nigel Lawson), gin and tonic (Geoffrey Howe), brandy and water (Benjamin Disraeli) and sherry and beaten egg (William Ewart Gladstone).
We at DT prefer a bit of Scotch to numb the pain while watching the announcement. Just kidding, we would never drink during business hours. We save that for the late night software releases. The next one by the way is on 5th April 2016, in time for all the new rules that take effect on the 6th.
Longest and shortest Budget speeches
The longest continuous Budget speech was by William Gladstone on 18 April 1853, lasting 4 hours and 45 minutes (clearly he was enjoying that sherry!). Benjamin Disraeli's speech in 1852 lasted 5 hours but included a break.
Benjamin Disraeli’s 1867 Budget speech lasted only 45 Minutes. Presumably he made all the changes in 1852 and there wasn’t much left to be said.
As Benjamin Franklin once wrote (or was it Daniel Defoe before him?) there is nothing certain in life but death and taxes. Good job then that we have software that could help you plan for both. And as for investments? Well we can’t give certainties (we want to, but Ben our CEO will commence work on a FSA approved Flux Capacitor after we complete work on our new AccessAdvice™ app which many of you showed an interest in at our annual conference) but in the interim we sure can give you forecasts at the 5th, 50th and 95th percentiles.
For more information on the Budget that is directly relevant to Dynamic Planner please do refer to our DT budget announcement (also contributed to by yours truly):
Or read the Ulysses version by going to the Government website here: