Budget 2016 is a complex mixture of tax changes in the first revenue-neutral Budget of the parliament with some surprising decisions from the decision to cut CGT rates to a new Lifetime ISA for under 40s and a raft of BEPS measures including tougher interest deductibility rules, says Bill Dodwell, head of tax policy at Deloitte
It’s a strange counterpoint that the Chancellor who brought us the Office of Tax Simplification also produces so much complexity in the tax system. Winners from Budget 2016 are taxpaying individuals, savers, higher rate taxpayers, small businesses and oil companies. Losers are larger businesses, banks (yet again), property investors and drinkers of sugary pop.
One of the overarching themes associated with this Chancellor is the desire to let individuals save without having to pay tax – provided of course it’s not in residential property.
This Budget saw the trailed Pensions ISA morph into the Lifetime ISA (LISA), which will effectively be a pension saving vehicle sitting alongside existing pensions. Those from 18-40 will be able to contribute £4,000 pa from 2017 and receive a government contribution of £1,000 – until age 50. The money can be taken freely at 60, or used to buy a first home. Interestingly, there will be some flexibility on short-term loans from LISA, without penalty.
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