Plain English guide to the Budget for investors


#1

Originally published at: http://whichinvestmenttrust.com/plain-english-guide-to-the-budget-for-investors/
The first Conservative only Budget since 1996 is also we are told the one they didn’t expect to be in making without coalition partners. So just what does a Conservative Budget look like for investors? Maike Currie has had a look. Inheritance tax George Osborne has delivered a ‘true blue budget’ – the first fully…


#2

Just seen that dividend tax is changing and you’ll now get a £5000 annual allowance. On the bad news, BTL income is being taxed more with restriction on interest tax relief.

Will be interesting to see what their plans are for pensions, maybe changing them in to ISAs.

For the first time ever he didn’t mention booze and fags, surprised by that.


#3

Just seen that dividend tax is changing and you’ll now get a £5000 annual allowance.

only applies to investments held outwith a SIPP or ISA

On the bad news, BTL income is being taxed more with restriction on interest tax relief.

If I understand correctly, this only impacts you if you are a higher rate tax payer. Can you set up your BTL as a business and benefit from lower corporation tax?


#4

The elephant in the room is he did nothing on housing! The benefits bill is so high because we’re not building enough houses, so rents are sky high which feeds through to Housing Benefit.

When will one of these measly worded, cowardly politicians do the right thing by their country and build on the bleedin green belt I’ll eat Paddy Ashdown’s hat.

*According the the FT only 7% of England (Not Scotland) is built upon which is ridiculous. We’re nowhere near full we just need to build.


#5

@rocco

On booze and fags, remember that this is actually the second Budget of this year. The booze and fags will already have been dealt with in the March Budget. The March Budget is the real emergency Budget which we have every year - it is an emergency because if we didn’t have it, the Government couldn’t raise any revenue for the coming financial year!

@rocco and @archibald

The new dividend rules are mainly targeted at those who set up in business as a one man company and pay themselves a dividend instead of a salary, subject to the higher income tax rates with NIC on top. HMRC has hated this idea for years, and this seems to be the way that they’re going to finally hit the nail on the head.

But it’s not great news for those of us who want to invest and save for a rainy day. Best to put as much into your ISA/SIPP as possible.

The rules on restricting finance costs for individual landlords to basic rate relief will start to apply in 2017 and will be phased in gradually. Doesn’t apply to commercial lettings (hint - is there a local fish and chip shop who needs a new landlord?)

Yes, you can hold the property portfolio within a company. Corporate rates are coming down to 18% and the interest relief will be unrestricted. But if you want to extract the cash there are those nasty new rules on dividends.

If you have an existing set of properties, might be problematic in putting them into a corporate structure. There’s stamp tax to pay on transferring them, and possible CGT - there are reliefs for the CGT but not so straightforward.


#6

Good point @satwaki_chanda. I had forgotten about the March budget.

You make some interesting and illuminating points about the budget too. I’d no idea the tax changes for landlords don’t apply to commercial property, interesting one that.

I don’t think people are fully aware of how much the changes in dividend income will effect them. Certainly and anecdotally some of my pals who pay themselves in that way haven’t been talking about it. Perhaps it won’t be until their next meeting with their accountants that we’ll hear their screams of horror.


#7

Good point @satwaki_chanda . Still they don’t usually miss the chance to raise a few more pennies by hiking up beer, fags and whisky. Glad he didn’t touch the beer mind, micro brewery beer is expensive enough!

I only own my own home but I had considered getting a buy-to-let but I suspect this won’t be the last time they tinker with tax and I’m never gonna buy a commercial premises because it’s a market I’m just not clued up about.

Best stick to shares and ITs me thinks.


#8

You should do one of your articles here on taxation @satwaki_chanda. You explain it more succinctly than than many of the commentators I have read.


#9

Thank you very much @casper very kind of you to say so. I’ve already contributed three articles here, thanks to the generosity of the Editor Dice McCairn @dicem. If he’s okay with it, and people want it, yes, I’d be happy to contribute more on tax-related topics.


#10

Any articles that help individuals to get a better understanding of their investments are to be welcomed, and tax issues are an important part of that understanding - as just about any discussion concerning ‘dividend tax credit’ demonstrates!


#11

I agree with @arkwelder and I know @dicem is a big fan of your effort @satwaki_chanda

  • Rob

#12

Here’s some more information about how the dividend tax is going to work.