Below are a few highlights from the Budget 2015 which was announced on the 8th July. If you'd like any more information, please feel free contact us on 01234 301000.
The Annual Investment Allowance will be permanently set to £200,000 from January 2016.
The Employment Allowance for National Insurance contributions will rise from £2,000 to £3,000 in April 2016.
Directors of limited companies who are the only employee will no longer benefit from the Employment allowance.
The dividend tax credit is to be replaced with a new £5,000 tax-free dividend allowance for all taxpayers from April 2016. Tax rates on dividends will increase to 7.5% for basic rate tax payers, 32.5% for higher rate tax payers and 38.1% for additional rate payers.
Insurance Premium Tax will be increased from 6% to 9.5% from November 2015.
Counties and elected mayors will gain power to set Sunday trading hours in their areas.
A new National Living Wage of £7.20 per hour for the over 25’s is to be introduced from April 2016. This will rise to £9.00 an hour by 2020.
Personal Allowances will increase to £11,000 in 2016/2017, with plans to increase this to £12,500 by 2020.
The higher rate tax band will increase from £42,385 in 2015/2016 to £43,000 in 2016/2017.
A tax lock to prohibit increases in the main rates of income tax, national insurance or VAT will be legislated within the coming weeks
From September 2017 working families with 3 and 4 year olds will receive 30 hours of free childcare.
Permanent non-dom status will be abolished from April 2017. From that date anyone who has been UK resident for 15 out of the last 20 years will be considered UK domiciled for UK tax purposes.
Public sector pay will increase by 1% a year for 4 years from 2016/2017.
Personal Allowances will increase to £11,000 in 2016/2017, with plans to increase this to £12,500 by 2020.
The higher rate tax band will increase from £42,385 in 2015/2016 to £43,000 in 2016/2017.
A tax lock to prohibit increases in the main rates of income tax, national insurance or VAT will be legislated within the coming weeks
From September 2017 working families with 3 and 4 year olds will receive 30 hours of free childcare.
Permanent non-dom status will be abolished from April 2017. From that date anyone who has been UK resident for 15 out of the last 20 years will be considered UK domiciled for UK tax purposes.
Public sector pay will increase by 1% a year for 4 years from 2016/2017.
From April 2017 a family home allowance will be introduced so that the family home can be passed on tax free to children and grandchildren. This allowance starting at £100,000 in 2017/2018 and increasing to £175,000 by 2020/2021 will be added onto the existing £325,000 Inheritance Tax threshold. As married couples and civil partners have double the allowance this means the total tax free allowance will be up to £1 million.
Reforms will ensure that those who downsize will not lose any of the allowance.
The allowance will be gradually withdrawn for estates worth more than £2 million.
From April 2016 the £40,000 annual pension contributions limit will be tapered down to £10,000 for those earning over £150,000.
There is to be a consultation on a new ISA style pension where savers pay tax on the income they put in but not when they take it out.
Tax relief for mortgage interest payments will be restricted to 20% for wealthier landlords by April 2020.
From April 2016 the “wear and tear allowance” will be replaced by a new system that only allows relief when furnishings are replaced.
Home owners who rent a room will be able to earn £7,500 tax free from next year, an increase from £4,250.
From 2017 there will be a flat rate of £140 for most cars, except in their first year when tax will be linked to the car’s CO2 emissions. Electric cars will not pay any road tax. Vehicles costing more than £40,000 will incur the £140 charge as well as an additional £310 surcharge for the first five years. Existing cars will not be effected.
The requirement for new cars and motorbikes to have their first MOT after 3 years will be extended to 4 years.
Fuel duty has been frozen for another year.
Transport for the North will be supported by £30 million of funding over 3 years with cities and counties being given more control over local transport.
3 million new apprenticeships will be created by 2020 funded by a levy on large employers.
From the 2016/2017 academic year new maintenance loan support will replace student grants. Loans will be repayable when graduates earn above £21,000 a year. Loans of up to £8,200 will be available.
£50million is to be used to expand the number of cadet units in state schools.
Household benefit cap to be reduced from £26,000 to £20,000 (£23,000 in London).
Support through Child Tax Credit will be limited to 2 children for children born from April 2017. Multiple births like triplets will be excluded from the limit.
Parents with children over 3 years old will be expected to look for work in order to get Universal Credit
Working age benefits, including tax credits and Local Housing Allowance, will be frozen for 4 years from 2016/2017. This does not include Maternity Allowance, Maternity pay, paternity pay and sick pay.
Automatic Housing benefit for 18-21 year olds will be abolished from April 2017.
Those aged 18-21 who are on Universal Credit will have to apply for an apprenticeship or traineeship, gain work-based skills or go on a work placement 6 months after the start of their claim.
Rents for social housing will be reduced by 1% a year for 4 years and tenants on higher incomes (over £30,000, over £40,000 in London) will be required to pay market rate or near market rate rents.
Disability benefits will not be taxed or means tested.
Working benefits will be withdrawn from those who are not disabled and have no children.
The government is to spend 2% of GDP on defence every year, meeting NATO’s target.
The Ministry of Defence’s Budget will rise by 0.5% above inflation up to 2020/2021.
An additional £1.5 billion a year will be invested in the military and intelligence agencies.
Recipients of the Victoria Cross and George Cross will see annual pension annuities rise from £2,129 to £10,000.
Government to fund a memorial to victims of terrorism overseas.
Rachael Mabbott FCCA CTA
09.07.15
Reforms will ensure that those who downsize will not lose any of the allowance.
The allowance will be gradually withdrawn for estates worth more than £2 million.
There is to be a consultation on a new ISA style pension where savers pay tax on the income they put in but not when they take it out.
From April 2016 the “wear and tear allowance” will be replaced by a new system that only allows relief when furnishings are replaced.
Home owners who rent a room will be able to earn £7,500 tax free from next year, an increase from £4,250.
The requirement for new cars and motorbikes to have their first MOT after 3 years will be extended to 4 years.
Fuel duty has been frozen for another year.
Transport for the North will be supported by £30 million of funding over 3 years with cities and counties being given more control over local transport.
From the 2016/2017 academic year new maintenance loan support will replace student grants. Loans will be repayable when graduates earn above £21,000 a year. Loans of up to £8,200 will be available.
£50million is to be used to expand the number of cadet units in state schools.
Support through Child Tax Credit will be limited to 2 children for children born from April 2017. Multiple births like triplets will be excluded from the limit.
Parents with children over 3 years old will be expected to look for work in order to get Universal Credit
Working age benefits, including tax credits and Local Housing Allowance, will be frozen for 4 years from 2016/2017. This does not include Maternity Allowance, Maternity pay, paternity pay and sick pay.
Automatic Housing benefit for 18-21 year olds will be abolished from April 2017.
Those aged 18-21 who are on Universal Credit will have to apply for an apprenticeship or traineeship, gain work-based skills or go on a work placement 6 months after the start of their claim.
Rents for social housing will be reduced by 1% a year for 4 years and tenants on higher incomes (over £30,000, over £40,000 in London) will be required to pay market rate or near market rate rents.
Disability benefits will not be taxed or means tested.
Working benefits will be withdrawn from those who are not disabled and have no children.
The Ministry of Defence’s Budget will rise by 0.5% above inflation up to 2020/2021.
An additional £1.5 billion a year will be invested in the military and intelligence agencies.
Recipients of the Victoria Cross and George Cross will see annual pension annuities rise from £2,129 to £10,000.
Government to fund a memorial to victims of terrorism overseas.
The government is increasing resources to HMRC so they can make sure people and business pay the tax that is due. This includes: -
- Extra investment until 2020 for HMRC’s work on evasion and non-compliance.
- Tripling the number of criminal investigations HMRC can undertake into complex tax crime concentrating on wealthy individuals and companies.
- Allowing HMRC to access more data to identify business that are not declaring or paying tax.
- Clamping down on organised crime gangs behind the illicit trade in alcohol and tobacco.
- Stopping investment fund managers using tax loopholes to avoid paying the correct amount of Capital Gains Tax on their profits from the fund.
- Making sure international companies pay tax on profits diverted from the UK.
- Introducing a “general anti-abuse rule” penalty and tough new measures for serial avoiders, including publishing names of people who repeatedly use failed tax avoidance schemes.
Rachael Mabbott FCCA CTA
09.07.15
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