What does the new tax year hold? Has George Osborne laid the foundations for achieving national solvency or are we on the rocky road to recession?
The March 2016 budget seemed to indicate that austerity is still on the Treasury’s road map – balancing the books and reducing debt. Certainly, there were no major surprises. We have outlined a few of the changes disclosed in this newsletter.
Lifetime Individual Savings Account (Lifetime ISA)
In a further bid to encourage savings for a first property purchase, or retirement, a new ISA is being launched from April 2017 – the Lifetime ISA.
It will be available from April 2017 for adults under the age of 40. They will be able to contribute up to £4,000 per year, and receive a 25% bonus from the government.
Funds from the Lifetime ISA, including the government bonus, can be used to buy a first home at any time from 12 months after the account opening, and be withdrawn from age 60. There will be penalties for early withdrawals.
The government also announced that the overall annual ISA subscription limit will be increased to £20,000 from 6 April 2017.
Stamp Duty (SDLT) increases buy-to-let
From 1 April 2016, individuals who purchase additional residential properties, second homes or buy-to-let properties will pay an additional 3 percentage points above the existing SDLT rates.
The higher rates will apply to property purchases in England, Wales and Northern Ireland. The additional rates are:
This will add a considerable on-cost for landlords and families that venture into multiple property acquisitions. Without this change, a residential property purchased for £250k would have had a SDLT charge of £2,500. Under the new rates this will increase to £10,000.
Properties purchased for under £40,000, caravans, mobile homes and houseboats will be excluded from the higher rates. Furthermore, small shares in recently inherited properties will not be considered when determining if the higher rates apply.
FOR MORE INFORMATION, Contact Morris Cook on 01691 654545
