Budget 2016: CGT and ISA changes reward millions of savers, investors and entrepreneurs

Wednesday, March 16, 2016

The Chancellor’s plan to reduce capital gains tax (CGT) rates are a very welcome encouragement for entrepreneurs and others investing in businesses – but yet another disappointment for those invested in residential property who fail to benefit from this latest initiative.  

“Not all investors or businesses count for the lower entrepreneurs’ relief rate, so the general reduction in CGT rates for higher rate taxpayers from 28% to 20% will encourage further investment in companies, helping to boost investment for those not eligible for entrepreneurs’ relief. Ultimately, this reflects the Chancellors leaning towards the enterprise economy, partly at the expense of owners of buy to lets and second homes,” says Tina Riches, head of national tax at Smith & Williamson, the accountancy, investment management and tax group.

“Basic rate taxpayers will also benefit where investment meets the Chancellor’s criteria, with a rate drop from 18% to 10%, providing help for those with large share portfolios who may be hit from April 2016 by the higher taxes on dividends. This is likely to mean taxpayers reconsidering their portfolios.”

“Changes to the ISA rules are a welcome compromise between encouraging spending in the economy and encouraging younger people to save for their retirement. Increasing the ISA allowance to £20,000 will mean more people’s savings will be stay outside the tax net.“

“Meanwhile, the new flexible lifetime ISAs, especially if they allow withdrawals and replacement of savings, will help younger people to save for a home and then top that back up as they get older.”

“Finally, we can all sigh with relief on hearing the Chancellor say that pension tax will not change for the time being. What we also need from the Government is a longer term pensions’ tax plan so people can plan their retirement with some certainty.”


Contact us

For more information contact Tina Riches

Tina Richies, Smith & Williamson's National Tax Partner

Tina Riches
National Tax Partner

T: 020 7131 4252
email Tina



By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

The tax treatment depends on the individual circumstances of each client and may be subject to change in future.

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