RSM comments on Budget 2016

Commenting on today’s Budget, Jim Meakin, RSM’s Head of Tax said:

'Overall, Budget 2016 contained lots of red meat for the party faithful – a reduction in capital gains tax, the abolition of class 2 NICs, a rise in the personal allowance and an increase in the higher rate tax threshold. 

'This was not, however, a Budget full of tax raising initiatives. In part this is because some of the imminent tax raising measures coming into force this April, such as the new regime for taxing dividends and the stamp duty surcharge for second home owners, have already been announced.

'However, there were some important revenue raising announcements which weren’t immediately apparent.

'During his speech, the Chancellor trumpeted the positive impact of the introduction of the new commercial stamp duty regime. Yes, the new system will mean a tax cut for small companies buying low cost properties but the charge will begin to bite for companies purchasing commercial properties costing more than around £1m. This measure alone is expected to raise £2.6bn over the next five years.

‘Another big revenue raiser is the plan to tackle loans made by Employee Benefit Trusts  – an attack on both historic and new schemes used by employers to avoid tax. Essentially, the Chancellor’s message was ‘settle now, or expect significant penalties on all outstanding loans’. The expected take from this particular initiative is expected to be £2.5bn over the next five years. 

‘Some predicted measures also failed to materialise. Entrepreneurs Relief remains more or less intact – bar a few minor amendments - and there has been a stay of execution for salary sacrifice schemes – but only until further research is done.’