Inheritance tax (IHT)
There was no change to the Inheritance tax threshold of £325,000, which was frozen until 2020-1 in the Summer Budget last year.
The Chancellor also announced in the Summer Budget that a £175,000 allowance would be phased in for passing on the family home on death, meaning that, effectively, the first £1m of a couple’s estate could be passed on free of inheritance tax.
An additional nil-rate band will be introduced for when a residence is passed on death to a direct descendant. This will be £100,000 in 2017-18, £125,000 in 2018-19, £150,000 in 2019-20, and £175,000 in 2020-21. It will then increase in line with Consumer Prices Index (CPI) from 2021-22 onwards. Any unused nil-rate band will be able to be transferred to a surviving spouse or civil partner.
The additional nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.
There will be a tapered withdrawal of the additional nil-rate band for estates with a net value of more than £2m. This will be at a withdrawal rate of £1 for every £2 over this threshold.
The existing nil-rate band will remain at £325,000 from 2018-19 until the end of 2020-21
Stamp Duty (SDLT – stamp duty land tax)
SDLT on commercial properties will be updated to brings its calculation more into line with that for residential properties.
Currently, no SDLT is paid on commercial properties up to £150,000, but at £150,001, the whole purchase price becomes liable to stamp duty at 1%, so would have had £1,500 to pay.
From midnight tonight, SDLT will be paid on the proportion of the purchase price falling within each band, with the new rates for freehold properties being:
|Transaction Value Band||Rate|
|£0 – £150,000||0%|
|£150,001 – £250,000||2%|
So, at £150,001, SDLT will be due on £150,000 at the 0% and £1 at 2%, so there would be nothing to pay (rounding the tax down), saving £1,500.
As announced in the Autumn Statement, there will be a new 3% surcharge on the purchase of second homes from 1 April 2016.
This will apply to all second homes (it was originally proposed that there would be an exemption for large scale property investors), and also to all purchases of residential property by a limited company.
Purchasers will have 36 months (rather than 18 months as originally announced) to claim a refund of the higher rates if they buy a new main residence before disposing of their previous main residence. Purchasers will also have 36 months between selling a main residence and replacing it with another without having to pay the higher rates
A new sugar levy will be introduced on soft drinks with added sugar, starting in 2018.
The Government announced that it will launch a consultation in May 2016 on how to extend Shared Parental Leave and Pay to working grandparents.
Insurance Premium Tax (IPT)
IPT will increase from 9.5% to 10% from 1 October 2016.