Summary of the Spring Budget
Capital Gains Tax
There are no changes to the basic CGT rates for 2017-18. The CGT on the disposal of chargeable assets, apart from residential property, remains at:
- 10% on disposals that form part of the basic rate band.
- 20% on disposals that form part of the higher rate band.
The higher rates (18% and 28%) will continue to apply to disposals of residential property subject to this tax and carried interest. Gains on a disposal of your home will continue to be exempt. The annual exempt amount for 2017-18 is £11,300 (2016-17: £11,100).
VAT Registration and Deregistration Limits
From 1 April 2017:
- Registration threshold increases to £85,000
- Deregistration threshold increases to £83,000
Personal Tax Allowance
The personal allowances for 2017-18 is £11,500 (2016-17: £11,000).
The maximum amount of free personal allowance that can be transferred between spouses is increased to £1,150 in 2017-18. Couples can only make a claim if one partner has spare personal tax allowance and the other is a basic rate tax payer.
From April 2017, any person aged from 18 to 40 will be able to save into a new Lifetime ISA until the age of 50.
Up to £4,000 can be saved each year and savers will receive a government bonus of 25% – that is a bonus of up to £1,000 a year.
Some or all of the money can be used to buy a first home, or it can be kept until age 60.
Accounts will be limited to one per person rather than one per home, so two first time buyers can both receive a bonus when buying together. If a saver has a Help to Buy ISA it can be transferred into the Lifetime ISA in 2017, or savers can continue saving into both, but it will only be possible to use the bonus from one to buy a house.
After your 60th birthday you can take out all the savings tax-free. You can withdraw the money at any time before you turn 60, but you will lose the government bonus (and any interest or growth on this). You will also have to pay a 25% charge.
ISA Limit from 2017
The ISA savings limit for 2017-18 is confirmed as £20,000.
Business Rates Increase
In response to the negative publicity regarding increases in business rates in England, particularly for retailers, the Chancellor has stepped in with help for smaller businesses.
There are three areas of relief announced:
- Small businesses that find they are losing Small Business Rates Relief from April 2017, will have any annual rates increase capped at the higher of £600 or the transitional relief cap.
- Local authorities will be funded to provide an element of discretionary relief, and
- Public houses with a rateable value of up to £100,000 will benefit from a fixed £1,000 business rate discount – subject to State Aid limits if multiple properties are owned. This discount is available for one year from April 2017.
Local authorities will be fully compensated for any loss of income because of these measures.
Changes to Trading and Income Property Allowances
The two previously announced £1,000 tax-free allowances for small scale trading or letting will still be introduced from April 2017, but will now include restrictions if the are generated by dealings with companies or partnerships of which the recipient is a participator or partner.
Loss Relief Reform
Legislation is to be introduced to reform the rules governing corporate losses carried forward from earlier periods. The changes will:
- Allow more flexibility by relaxing the way companies can use carried forward losses from 1 April 2017.
- Restrict the set-off of losses such that profits cannot be reduced by more than 50%. This restriction will apply to companies or groups with profits of more than £5m.
Corporation Tax Relief for Museums and Galleries
Rates for 2017-18, already announced, are 25% for touring exhibitions and 20% for non-touring exhibitions. Following consultation, the draft legislation is to be amended to allow for exhibitions that have a performance element, but where the live performance is not the main focus of the exhibition.