Budget 2016: Chancellor's announcements that affect CA students
This week, the Chancellor gave his 2016 Budget Statement to Parliament, announcing a number of changes to the tax system for the coming years.
These changes will be brought into law as part of the Finance Act 2016 and many of them will be incorporated into the ICAS course notes for TC classes beginning from August 2016 and for TPS, TPE and ITP classes in 2017.
Here is our summary of some of the key points, divided into changes that will potentially affect your future studies at TPS, TPE or ITP if you will be studying in 2017, and changes that may be of interest to you personally:
Changes that will affect future ICAS course notes:
- The tax-free personal allowance will be increased to £11,500 in April 2017 (currently £10,600 rising to £11,000 in April 2016)
- The threshold above which people will pay higher rate tax will rise in April 2017 to £45,000 (currently £42,385 rising to £43,000 in April 2016)
- Capital gains tax rates are to be cut from 18% and 28% to 10% and 20% in April 2016
- The annual ISA subscription limit is to rise to £20,000 in April 2017 (currently £15,240)
- A new ‘lifetime’ ISA for the under-40s has been introduced as a way of encouraging saving. Savers can contribute up to £4,000 per annum and the Government will offer a potential return of 25%
- Class 2 NIC for the self-employed is to be scrapped (currently £2.80 per contribution week)
- The headline rate of corporation tax will be cut to 17% by 2020 (currently 20%, dropping to 19% in 2017)
- The current slab system of Non-residential Stamp Duty Land Tax (SDLT) is to be replaced with a graduated system like the one in place for both residential SDLT and for Land and Buildings Transaction Tax
- Petroleum Revenue Tax is to be abolished
Changes that will not affect ICAS notes but may be of interest to you personally:
- Fuel duty has been frozen for the sixth year in a row
- Beer, cider and spirits duties have been frozen
- Excise duties on tobacco are to rise by 2% above inflation
- A new sugar tax will be levied on producers of soft drinks with sugar levels above certain thresholds. The tax will be paid by the drinks producers but the cost may be passed on to consumers
- Severn River Crossing tolls have to be halved by 2018.
- Insurance premium tax to increase by 0.5% which will impact on car insurance, travel insurance, home insurance, etc.
For further analysis see ICAS’s response to the Budget.