On Wednesday 16 March 2016, George Osbourne delivered his 8th budget as Chancellor. Among a raft of tax changes, hitting the real estate sector particularly hard, there were also announcements of funding for key infrastructure projects and cuts to capital gains tax.
Budget highlights 2016:
Read our blog articles for more insight and see the press quotes below for the opinions of our experts on the changes.
Elizabeth Bradley, head of the corporate tax team at international law firm Berwin Leighton Paisner, said:
“Much of the British property industry will be very disappointed with today’s Budget changes. The property sector is effectively being used to placate the Government’s back benchers.
“The Chancellor has acknowledged the need to build more homes but the extension of the extra SDLT rate on buy-to-let to large investors will discourage investment in the private rented sector.
“Overall, increased tax costs will not be offset by the reduction in corporation tax rates to 17% by 2020.”
John Overs, partner at international law firm Berwin Leighton Paisner, warned that the reduction of companies’ ability to carry tax losses forward to shelter profits to 50% would adversely impact their deferred tax provision in their balance sheets.
“This may have all sorts of serious consequences. For instance, additional liabilities on companies’ balance sheets may be created that would have implications for banking covenants, essentially making it more difficult for businesses to secure bank lending or forcing them into refinancing or restricting their ability to pay dividends.”
Neal Todd, a partner at law firm Berwin Leighton Paisner, added: “Britain may be blazing a trail for other countries with the reduction of corporation tax to 17% by 2020.
“Yet this is being paid for by the crackdown in interest deductibility to 30% for large firms and the earning stripping restrictions on losses.
“Together, these will add a significant additional burden to the tax planning roadmap for major UK businesses.”