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Spring Budget 2017
Trading and property income allowances As previously announced, the government will legislate in Finance Bill 2017 to create two new income tax allowances of £1,000 each, for trading and property income. The allowances can be deducted from income instead of actual expenses. The trading allowance will also apply to certain miscellaneous income from providing assets or services. Following the publication of the draft legislation, revisions will be made to prevent the allowances from applying to income of a participator in a connected close company or to any income of a partner from their partnership. NS&I Investment Bond The Budget confirms the rate of the NS&I Investment Bond announced at Autumn Statement 2016. The Investment Bond will offer a rate of 2.2% over a term of three years and will be available for 12 months from April 2017. The Bond will be open to everyone aged 16 and over, subject to a minimum investment limit of £100 and a maximum investment limit of £3,000.
Capital taxes Inheritance tax: the new ‘family home’ band
April 2017 sees the introduction of the new ‘residence nil-rate band’ (RNRB), meaning that many individuals may be able to pass on a family home tax-free on death. Inheritance tax is currently charged at 40% on the proportion of an individual’s estate exceeding the ‘nil-rate band’ of £325,000. Married couples and registered civil partners can already pass any unused nil-rate band to one another on death. Under changes announced by the government, an additional nil-rate band will be introduced for each individual to enable a ‘family home’ to be passed wholly or partially tax-free on death to direct descendants such as a child or grandchild. A step-child, adopted child or fostered child is also regarded as a direct descendant. The RNRB is set to come into effect from 6 April 2017 and is in addition to an individual’s own nil-rate band. The RNRB will be set as follows:
£100,000
2017/18 2018/19 2019/20 2020/21
£125,000
£150,000
£175,000
The additional band can only be used in respect of one residential property. The property does not have to be the main family home, although it must, at some point, have been a residence of the deceased. There will be a tapered withdrawal of the RNRB for estates valued at more than £2m. This will be at a withdrawal rate of £1 for every £2 over this threshold.
Impressive delivery: William Gladstone has presented the most Budget speeches of any Chancellor to date, notching up an impressive 12 deliveries
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