2015-16 is history. Actions that needed to be taken before the 6 April 2016 are now safely completed (?) and we have a whole new raft of legislation to consider.
Following hard on the heels of the new dividend taxation regime, the new Finance Bill has confirmed that treating any form of distribution of reserves from a limited company as capital rather than income, after 5 April 2016, is going to be tricky. Legislation is included that will not only seek to treat distributions as part of a member’s voluntary winding up as income, but the transaction in securities rules are being beefed up to make it more difficult to obtain clearance for other schemes, such as treating company share buy-backs as disposals of shares and therefore capital receipts.
CGT rates are reduced to 10% and 20%, always welcome news, but buy-to-let and second home buyers will still pay CGT on disposals during 2016-17 at the 2015-16 rates (18% or 28%).
Landlords of residential property are also stuck with significant increases in SDLT, and they have lost the 10% wear and tear allowance (replaced by the new replacement furniture relief). For most landlords this latter change will result in an increase in their income tax payments.
Is there any better news on the tax front? It’s hard to find.
Certainly, advisors should be reconsidering tax planning for small businesses in the wake of the 2016 budget. Is it still worthwhile to incorporate small businesses? Should small company clients, that always distribute all of their profits as dividends or salary, still be incorporated or should they revert to a self-employed status?
Time to sit back and reconsider best advice in these key areas. 364 days to go!