Spring Budget 2016 – Key Points
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Spring Budget 2016 – Key Points

Spring Budget 2016 – Key Points


Changes back dated

  • Entrepreneurs’ relief reinstated for gains made on  business goodwill transferred on incorporation to close company backdated to 3 December 2014, subject to certain conditions .

Changes with immediate effect


  • Entrepreneurs’ relief to apply on disposal of private held business asset when it is associated with a disposal of the business to a family member – with effect  for disposals made on or after 18 March 2016.
  • Reforms to SDLT on non-residential property from 17 March 2016, with reductions for much commercial property.
  • New rule to ensure trading and property income in non-monetary form brought into account from 16 March 2016.
  • New lifetime limit of £100,000 on CGT exempt gains on employee shareholder shares (post 16 March 2016 agreements).
  • Additional obligations to deduct income tax at source from royalties paid to certain non-residents imposed from 17 March 2016.
  • Targeted anti avoidance rule in disguised remuneration legislation from 16 March 2016.
  • Simplification of Enterprise Management Incentive rules in relation to post 16 March 2016 rights issues.


From April 2016


  • Capital gain tax rates reduced to 20% for higher rate taxpayers and 10% for basic rate taxpayers, but no change for CGT on residential property or carried interest.
  • CGT rate for trusts and estates reduced to 20%, but remains at 28% for residential property and carried interest.
  • Repeal of renewals allowance for replacement and alteration of tools
  • VAT registration threshold increases from £82,000 to £83,000 and de-registration threshold increases from £80,000 to £81,000.
  • Corporation tax charged on loans to participators (s 455 charge) which are outstanding 9 months after year end increased from 25% to 32.5%.
  • Benefit in kind charge on zero emission vans remains at 20% of standard van charge rather than increasing to 40% (£634 rather than £1,238).
  • Clarification that ‘fair bargain’ rule for benefits in kind apply where cash equivalent value is calculated by reference to tax rules rather than the cost to employer.
  • Duty on beer, spirits and other drinks above 22% alcohol by volume and most ciders frozen. Duty on other drinks increased in line with inflation.
  • Road fuel duty frozen.

From April 2017


  • Tax-free personal allowance increased to £11,500.
  • 40% tax threshold increased to £33,500 of taxable income.
  • Two new tax allowances of £1000 each – one for trading income and one for income from property.
  • ISA allowance increased to £20,000.
  • New lifetime ISA to be launched for those aged 18 to 40 allowing savings of up to £4,000 a year on which Government will pay a bonus of 25%.
  • Business rates small property 100% relief limit increased from a rateable value of £6,000 to £12,000 and tapered relief limit increased up to rateable value £15,000.
  • More flexibility in the offset of brought forward losses for companies.
  • Amended rules on part surrenders and part assignments of life insurance policies to prevent excessive tax charges arising on these products.


Future years


  • Class 2 National Insurance contributions abolished from April 2018 and class 4 NIC reformed to provide benefit entitlements.
  • Employer National Insurance on termination payments above £30,000 from April 2018
  • Sugar levy on manufacturers of soft drinks with sugar content above 5g per 100ml introduced from April 2018
  • Rate of corporation tax reduced to 17% from 2020.
  • To prevent overseas sellers from avoiding charging VAT in the UK HMRC will be able to require non-compliant overseas traders to appoint a tax representative in the UK, and will be able to inform online marketplaces of the traders who have not complied.
  • Businesses who store or sell goods on behalf of overseas traders will themselves become liable for any UK VAT avoided on those sales.
  • New penalty for participating in VAT fraud.
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