George Osborne


ISA Limit

  • From 6th April 2017 the ISA limit will increase to £20,000

Lifetime ISA

  • A new Lifetime ISA will be introduced in April 2017 for the under-40s
  • The allowance will be £4,000 per annum, which will form part of the annual £20,000 total ISA allowance
  • Investors will receive a £1 government top-up for each £4 saved, added at the end of each tax year
  • Investors can withdraw their capital tax-free to buy their first house (up to a value of £450,000), after the age of 60 or if terminally ill. Other exceptions may apply.
  • Withdrawals at any other time will have a 25% charge
  • It will be possible to roll-over the existing Help to Buy ISA into the Lifetime ISA, retaining the £4,000 contribution limit.


  • Major reforms to pensions were expected in this Budget until that speculation was largely squashed in the press earlier in the month
  • Public sector employer contributions will rise as a result of a revaluation applied to the discount rate used for public sector pensions. This is designed to ensure public sector pensions remain sustainable
  • The reduction to the lifetime allowance, from £1.25m to £1m, will proceed in April.
  • Higher earners will face a reduced annual allowance, tapered down to as low as £10,000 a year depending on the level of their earnings


Capital Gains Tax (CGT)

  • There were big cuts to capital gains tax, with the two rates of this tax cut from 28% and 18% to 20% and 10% respectively.
  • These CGT cuts come into force at the start of the new tax year in April, although the tax will remain at its current rates for gains on residential property and carried interest
  • From 17 March, there is to be a lifetime limit of £100,000 on the CGT exempt gains that an individual can make on the disposal of shares acquired under employee shareholder

Personal Taxes

  • The income tax personal allowance will increase to £11,500 in April 2017, on track to reach the government’s target of £12,500 by the end of this parliament.
  • From April 2017, the higher rate income tax threshold will rise to £45,000 from its current level of £42,385 with a £50,000 target by the end of this parliament

Dividend Tax

  • As already announced, the dividend tax credit will be replaced by a new £5,000 tax-free dividend allowance for all taxpayers from 6th April 2016. Dividends that exceed this allowance will be taxed as follows:
    • Basic rate band – 7.5%
    • Higher rate band – 32.5%
    • Additional rate band – 38.1%

Stamp Duty Land Tax (SDLT) on purchases of additional residential properties

  • The higher rates will be 3 percentage points above the current SDLT rates, and will take effect on and after 1st April 2016.
  • The main rate of corporation tax will be cut to 17% in 2020. It currently stands at 20% and is scheduled to be reduced to 19% next April, before falling to 18% in April 2020.
  • Business rates will be cut for all properties in England, with the small business rate relief threshold increased to £15,000 from £6,000 permanently from April next year.
  • As of 17 March 2016, the 0% rate on commercial stamp duty will apply on purchases up to £150,000. Commercial property stamp duty will be 2% on the next £100,000 and 5% top rate above £250,000.
  • The Chancellor also introduced a new 2% rate for high-value commercial leases with net present value above £5m.
  • There were some more anti-avoidance schemes announced in the Budget for big businesses, designed to raise an additional £12bn of tax revenue by 2020.
  • Entrepreneurs’ tax relief will be extended to long term investors in unlisted companies. A rate of 10% of capital gains tax (CGT) for gains on the disposal of ordinary shares, provided they are held for a minimum of three years from 6 April 2016
  • Detailed action to shut down disguised remuneration schemes was announced- such as employee benefit trusts (EBT) which sought to avoid the payment of national insurance contributions – with targeted rules expected to bring £2,5bn into Treasury coffers by 2020/21
  • Businesses will have their employer NI bill cut by another £1,000 from April 2016, as the Employment Allowance rises from £2,000 to £3,000
  • From November 2015 the standard rate of Insurance Premium Tax was increased from 6% to 9.5%. The Budget announced that the standard rate of IPT will be increasing again by 0.5% to bring the rate up to 10% (lower than expected)
  • From April 2016, a new National Living Wage of £7.20 an hour for the over 25s will be introduced. This will rise to over £9 an hour by 2020
  • Fuel duty was frozen for a sixth consecutive year, saving the average driver £75 a year
  • All schools in England are expected to be converted to academies by 2020, or to have an academy order in place to convert by 2022
  • The soft drinks industry will face a new ‘sugar levy’ designed to reduce childhood obesity. This levy will fund a doubling of the primary schools sports premium to £320 million per year from September 2017
  • The Money Advice Service, a free government backed financial guidance service funded by regulated financial services firms, will be scrapped
  • £700m extra will be spent on strengthening flood defences
The headlines in the lead up to the budget have been very accurate.

That said George Osborne still managed to spring on us a number of surprises: we’re feeling positive towards the announcements of a fuel duty freeze and a reduction in the rate of CGT from 18/28% to 10/20% for investment assets.

As a hugely popular savings vehicle for many years now, the Lifetime ISA is major lift on the ISA system. It certainly adds an extra option to help savers get on the housing ladder or boost their retirement income.

As a Budget for ‘the next generation’ the Lifetime ISA looks like a response to encourage the young to save for their future. It makes savings easier to access for many, and will hopefully help entice the younger generation into a savings habit.

It may be seen as the first step on the road to a pension ISA for everyone, however pensions still offer greater potential for total savings. We must also not forget the government efforts with auto enrolment which appears to be engaging well with younger workers. Could this pose a direct threat to the one thing the government has worked hard to create?

Overall this was a Budget which savers and investors should cheer.

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This blog aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice from our Financial Advisers.