Summer Budget held some positive outcomes
So the summer budget held some interesting results with some good outcomes in some areas and not so good in others!
Covering the positives from the budget, the lowering of corporation tax from the current 20 per cent, to 19 per cent in 2017 then a cut to 18 per cent in 2020 spells great news for businesses and economic growth.
The Annual investment Allowance being set at its highest ever amount of £200,000, and not constantly changing, will help businesses plan better for long term investments and not worry about any fluctuation in this amount. The cash flow of businesses investing in equipment will improve, as the tax relief will be on the year that the item was purchased.
An increase in personal allowance and tax bands will always be welcomed; the rise to £11,000 in 2016 will ensure people everywhere are much better off, which will boost consumer spend and in turn, stimulates the economy. Increasing employers NIC allowance to £3,000 (from £2,000) also spells great news for businesses.
The extension of the NIL IHT band will enable family homes to be passed on and added to the existing £325,000 threshold. This will be brought in from 2017-18.
Increased free childcare will encourage parents back into work and help those in work struggling to make ends meet due to childcare costs.
There are some positive outcomes to celebrate, although some perhaps not so celebratory.
The taxing of dividend income is a move that will only harm small companies. Shareholders taking dividend income will pay more tax on the dividends. The alternative would be to increase salary but that would see an increase in NIC costs.
The restriction of interest to basic rate tax only on buy-to-let property will also be detrimental to some and the reduction in the amount you can contribute to pension, dependent on your income, will also not be so warmly received!
Overall, there were some good outcomes for UK businesses that will aid continued growth. It goes without saying that you can’t please all of the people all of the time!
If any of our clients have any queries or concerns about how the budget proposals may affect them, they can get in touch with us on 01827 54944.