The Chancellor of the Exchequer delivered his Summer Budget today and the key announcements for businesses are:
- The introducing a new compulsory National Living Wage from April 2016 of £7.20 an hour for all over 25s will be introduced. This is set to rise to over £9.00 an hour by 2020.
- The tax-free Personal Allowance will be increased from the current level of £10,600 to £11,000 from April 2016.
- The Higher Rate threshold will increase from the current £42,385 level to £43,000 from April 2016.
- Dividend tax reform that will replace the Dividend Tax Credit with a Dividend Tax Allowance of £5,000 for all taxpayers from April 2016.
- Tax rates on any additional Dividend income will set the dividend tax rates at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
- A Family Home Allowance to be phased in from 2017-18 and added to the existing £325,000 Inheritance Tax threshold, meaning that the effective Inheritance Tax threshold will rise to £1 million in 2020-21.
- From April 2016, the amount people with an income of more than £150,000 can pay tax-free into a pension will be tapered down from the current £40,000 level to a minimum of £10,000.
- Corporation Tax will be cut to 19% in 2017 and 18% in 2020.
- The Annual Investment Allowance will be set at its highest level of £200,000 from January 2016 and this change will be permanent.
- The Employment Allowance will increase by a further £1,000 to £3,000 from April 2016.
- However, also from April 2016, companies where the director is the sole employee will no longer be able to claim the Employment Allowance.
- From September 2017, working families with 3 and 4 year olds will receive 30 hours of free childcare which is an increase from the 15 hours currently offered.
Our detailed review of the Summer Budget will be published tomorrow. In the meantime, if you would like to discuss how the Summer Budget will affect you, please email us at email@example.com.