Phased reduction in corporate tax rates
Corporation Tax is to be cut progressively over the course of the current Parliament, with a reduction from the current rate of 20% to 19% in April 2017 and 18% in April 2020.
The basic personal allowance will rise from £10,600 to £11,000 from April 2016. This means that those with taxable income of less than £100,000 will not pay income tax on the first £11,000 of taxable income. A further increase to £11,200 from April 2017 was also announced along with the objective to increase this further to £12,500 by 2020.
As in previous years, those earning over £100,000 will continue to lose their personal allowance at a rate of £1 for every £2 of taxable income above £100,000. Therefore, those earning above £121,200 lose their personal allowance entirely.
The basic rate of income tax is currently 20%. From April 2016, the threshold at which income tax is payable at the higher rate of 40% will increase from £42,385 to £43,000 (for those entitled to the full personal allowance). This will increase again to £43,600 from April 2017. As of April 2016, the Scottish Rate of Income Tax will apply to Scottish taxpayers so the tax rates may will differ after that date for those who qualify as a "Scottish taxpayer" under the legislation.
No changes to Capital Gains Tax
No significant changes to Capital Gains Tax were mentioned in the Budget, and the rates remain 18% and 28% for individuals, based on their income tax rate. There was no increase in the annual exemption which remains at £11,100.
Inheritance Tax ("IHT")
The IHT nil rate band remains frozen at £325,000 until April 2021 - a three year extension on the previous freeze at 2009 rates. However, major new changes have been introduced by the creation of a separate nil rate band for residences passed to children or grandchildren. Learn more about the IHT changes, here.