The 2016 budget may have passed by without turning too many heads, but there were fact in some key changes worth noting… Capital Gains Tax
The headline rate of Capital Gains Tax (CGT) is to be cut from 28% to 20%. CGT is an annual tax on the gain made from selling an asset (such as a person possession, second home or shares), which has gone up in value. It was also announced that the basic rate of CGT will be cut from the current 18% to 10% at the beginning of the new tax year. The reduction in CGT will not apply to residential property, which means the previous higher rates will still apply to gains from additional property. Lifetime ISA
George Osborne announced the introduction of a new Lifetime ISA, to be launched in April 2017. This is to go alongside the Help to Buy ISA, which is available to help those saving for a deposit for a home. But the new Lifetime ISA, or “LISA”, can be used to save for retirement as well as a property, without paying tax on the interest earned. The new account is available to those aged 18 to 40 and offers a bonus of 25% on any savings, up to £4,000 a year, deposited before the account holder turns 50. Tax Threshold Increase
One of the biggest announcements from the Chancellor was that the higher rate of tax threshold is to be raised to £45,000. This is a move surrounded by political controversy, especially in conjunction with the planned cuts in disability benefits. These changes are expected to save half a million people money, and are to be phased in to increase from £42,385 to £43,000 in 2016 and finally to £45,000 by this time next year. Stamp Duty
As well as confirming the planned 3% stamp duty land tax (SDLT) surcharge on all purchases of additional homes, the government also withdrew the originally planned exemption for those with 15 properties or more. Osborne also announced that purchasers who move before they sell their main residence now have 36 months to sell and reclaim the extra stamp duty paid. Personal Allowance
As well as the increase in the higher rate tax threshold, George Osborne announced that the Personal Allowance will increase to £11,500, from £10,600. This is the amount of money you must earn before you start paying income tax. The threshold will rise to £11,000 in 2016, eventually climbing to the new figure by April 2017.
Should you need advice on tax, you should seek advice from an accountant, as tax advice is not regulated by the Financial Conduct Authority. However, if you would like to discuss how some of these changes may affect saving for a house, stamp duty, or anything else relating to mortgages and your home, we are here to help, call us on 01202 937444 or visit our websites for a Mortgage Broker in Poole a Mortgage Broker in Bournemouth or a Mortgage Broker in Reading