Some of the main headlines from last week’s Budget may have been about the Sugar Tax and the proposed change to Personal Independence Payments, but there was a lot more “under the hood” to take note of for taxpayers.

The Chancellor increased the higher rate income tax band from £42,375 to £45,000 and increased the personal allowance from £11,000 to £11,500 – a boost, according to George Osborne, for around 31m UK taxpayers. 

More surprising was the announcement that capital gains tax will reduce from 28% to 20% in April. However, this excludes residential property, which is where the majority of people make their largest gains. This is another blow to second home-owners and buy-to-let landlords, following the increases to stamp duty land tax announced in the last budget. Nevertheless, it will allow investors sitting on large gains in their portfolios to realise them at a lower rate.

The situation was a little more complex for the self-employed. Those operating limited companies will receive a benefit from lower rates of corporation tax. These will fall from their current level of 20% to 17% by 2020. The self-employed will also see an annual tax cut of over £130 following abolition of Class 2 National Insurance contributions, though changes are planned to class 4 contributions in order to ensure that benefits entitlement is retained.

The Chancellor also announced a raft of savings incentives. The ISA allowance will rise from £15,240 in the 2016/17 tax year to £20,000 in 2017/18 for all investors. The Junior ISA allowance will remain at its current level of £4,080. At the same time, the Chancellor also announce the launch of a ‘lifetime Isa’ for those aged between 18 and 40.

Up to £4,000 a year can be invested alongside an existing Isa (subject to the overall £20,00 limit) and investors will receive a 25% boost on their annual contribution from the Treasury up to the age of 50. The proceeds from the Lifetime ISA can be put towards a first home with a value of up to £450,000 or set aside for retirement from age 60. Investors can use the money for other purposes, but they will lose the government contribution and associated growth, plus be subject to a 5% surcharge. Many saw the death-knell for pensions in the new boost for Isas, but for the time being, they remained untouched.