Sugar tax and a few sweeteners - Budget 2016. Reaction from Thames Valley accountants James Cowper Kreston

George Osborne in today’s (16th March) Budget introduced a new sugar tax and announced a number of sweeteners.

Those with a sweet tooth will, in two years’ time, find themselves having to pay more for their favourite fizzy drink, but are likely to have more cash in their hand to pay for it.

Sharon Bedford, a partner specialising in business tax at Thames Valley accountants and business advisers said: “George Osborne had his hands largely tied by the EU referendum, and many of the big decisions had already been announced.  But he was still able to pull one or two surprises from his red case.

“The fall in the corporation tax rate to just 17 per cent from 2020 will be welcomed by all businesses.  And small businesses will particularly welcome the the extension of business rate relief to £15,000.  Some 600,000 businesses in the UK will now no longer pay business rates at all.”

Sharon continues: “But small businesses are not having it all their own way.  From April, business owners who chose to pay themselves by way of a dividend will end up paying more tax.”

Ian Miles, a partner at James Cowper Kreston who advises individual and their families, adds: “The increase in the tax free personal allowance to £11,500 and extending the higher rate threshold to £45,000 will be welcomed by most, with the exception of those earning over £100,000.

“Savers under 40 will welcome the life time ISA, and micro business – the airbnbers and the ebay traders – can now earn up to £1,000 tax free.”

Budget winners

• UK companies
  • Corporation tax rate to fall to 17% from 2020
  • Business rate relief to increase to £15,000 (currently £6,000) - 600,000 businesses no longer paying rates
• Micro business that sell goods online (ebay traders) and Airbnbers can make up to £1,000 tax free
• Sporty school kids – sugar tax revenues to increase sport in primary schools and after school activity in secondary schools from 2017
• Savers under the age of 40 – introduction of life time ISA
• Low earners – increase in tax-free allowance to £11,500
• Higher earners – higher rate tax threshold increased to £45,000
• Businesses buying commercial premises up to £1,000,000 will pay lower stamp duty
• Those wishing to go to Wales – reduced Severn Bridge tolls

Budget losers

• Sugary drinks manufacturers – introduction of sugar tax
• Everyone buying insurance policies – tax on premiums to increase by 0.5 per cent
• Tax avoiders, including large multi-national businesses undertaking complex tax planning
• Buy to let investors – no reduction in capital gains tax, and the introduction from April of the higher SDLT rate announced last year, and the reduction of interest relief on mortgage payments
• Business wishing to buy premises over £1,000,000 will pay more Stamp Duty
• Business owners extracting income via dividends – from April 2016 (Previously announced)
• School children – having to stay in school for an extra hour, having to study maths until 18 and having to pay more for their sugary drinks.

James Cowper Kreston Brexit poll

James Cowper Kreston today polled 156 business leaders across Oxford and the Thames Valley on whether the UK should remain or leave the EU.  76 per cent of business leaders will be voting to stay, 17 per cent voting to leave and just nine per cent undecided.

Budget Booklet 2016
Tax Rates 2016/17