The Chancellor’s Budget, which cut growth forecasts for the UK economy, was given at a time of great uncertainty – partly coming from the global economy failing to recover as quickly as hoped and partly from whether we stay or leave the European Union. In this period of lacklustre growth and uncertainty, the Chancellor was reluctant to cut taxes or dramatically increase spending in the short-term. However, after believing that the rates of Corporation Tax were already decided for the next few years, we had a surprise extra reduction with the rate reducing from the expected 18% to 17% in April 2020. Also, the main rate of capital gains tax is cut from 28% to 20% but with buy-to-let landlords and second home owners still suffering the higher rate.
We already knew that pensions would be left largely untouched so a new savings vehicle called a Lifetime ISA will be available to individuals aged under 40. This will run in parallel to the existing pension regime. If it proves a success, it may evolve into the pension ISA which had previously been suggested.
Individuals will also be pleased to see the tax free personal allowance and 40% tax threshold increasing. So, from April 2017, the 40% tax rate will only apply to those with income above £45,000. Motorists will be happy that fuel duty continues to be frozen instead of the expected increase but will be less happy if they enjoy fizzy drinks as the sugar tax now due to be imposed on drinks manufacturers will almost certainly be passed on to the consumer.