Budget Announcements 16th March 2016

Anti-avoidance

HMRC have added another tranche of anti- avoidance legislation which are continually adding to the uncertainty and complexity of normal tax payer’s affairs. This is targeted against large corporates.

  1. Reducing amount of interest relief allowed to 30% of their UK profits
  2. Stop international companies reducing tax rates by diverting income through foreign countries
  3. Withholding tax on Royalty income will be required to reduce profit diversion to offshore entities

Capital Gains Tax

Major changes to capital gains tax.

Basic position reduced to 20% for higher rate tax payers (from 28%) and 10% for basic rate tax payers 9 (from 18%) But leaving buy to let properties at old rates.

10% Entrepreneurs relief rate for disposals of all unquoted trading companies. This will be great for small and non-employee investors. To obtain the relief you need to subscribe for new shares after 17th March 2016 and held for 3 years after 6th April 2016.

Personal Service Companies

Yet another attempt to clarify the position re personal service companies. One new measure that has been confirmed is that the tax cost on loans to participators to match the new dividend rules i.e 32.5%. This is tweaking the new legislation already in gestation.

  • New dividend rules 7.5% for recipients of dividends in excess of £5,000 per annum
  • More subcontractor rules-to reduce expenses available
  • Legislation to target extracting value from companies as capital rather than income.

For further support

To talk through how this might impact on your call our Financial Services team on 0161 476 8276 or email hello@hallidays.co.uk

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