tax

Personal Tax Rates 2015/16

Personal taxation

Income tax allowances and reliefs 2015/16 2014/15
Personal (basic) £10,600 £10,000
Personal allowance reduced if net income exceeds* £100,000 £100,000
Transferable tax allowance for married couples/civil partners £1,060 N/A
Personal (age) if born between 6/4/38 and 5/4/48 N/A £10,500
Personal (age) if born before 6/4/38 £10,660 £10,660
Personal (age) reduced if net income exceeds* £27,700 £27,000
Married couples/civil partners (minimum) at 10% § £3,220 £3,140
Married couples/civil partners (maximum) at 10%* § £8,355 £8,165
Child benefit charge:
- 1% of benefit for every £100 of income between £50,000 and £60,000
Blind person’s allowance £2,290 £2,230
Rent-a-room tax-free income £4,250 £4,250
Venture capital trust (VCT) at 30% £200,000 £200,000
Enterprise investment scheme (EIS) at 30% £1,000,000 £1,000,000
- EIS eligible for capital gains tax (CGT) deferral relief No limit No limit
Seed EIS (SEIS) at 50% £100,000 £100,000
- SEIS CGT reinvestment relief 50% 50%
Registered pension scheme:
- annual allowance £40,000 £40,000
- money purchase annual allowance £10,000 N/A
- lifetime allowance £1,250,000 £1,250,000
* £1 reduction for every £2 of additional income over the income threshold.
§ Where at least one spouse/civil partner was born before 6/4/35.
Income tax rates 2015/16 2014/15
Starting rate 0% 10%
- on savings income up to** £5,000 £2,880
Basic rate of 20% on income up to £31,785 £31,865
Higher rate of 40% on income £31,786- £150,000 £31,866- £150,000
Additional rate of 45% on income over £150,000 £150,000
Dividends for:
- basic rate taxpayers 10% 10%
- higher rate taxpayers 32.5% 32.5%
- additional rate taxpayers 37.5% 37.5%
Trusts:  
- standard rate band generally £1,000 £1,000
- dividends (rate applicable to trusts) 37.5% 37.5%
- other income (rate applicable to trusts) 45% 45%
** Not available if taxable non-savings income exceeds the starting rate band.

 

Income tax – personal allowance and basic rate band

For 2015/16 the personal allowance will rise from £10,000 to £10,600 and there will be an £80 reduction in the basic rate band to £31,785, as previously announced. The personal allowance will be increased to £10,800 for 2016/17 and £11,000 for 2017/18. The basic rate limit will be increased to £31,900 for 2016/17 and £32,300 for 2017/18.

SAVER – Protect your personal allowance. In 2015/16 your personal allowance is reduced by 50p for every pound your income is over £100,000. If you can reduce your income below £100,000, eg by making a pension contribution or charitable gift, you should benefit from the full allowance.

Class 2 national insurance contributions (NICs)

The government intends to abolish Class 2 NICs in the next parliament and reform Class 4 NICs to introduce a new benefit test. There will be consultation on the detail and timing of these reforms later in 2015.

Tax-free childcare

The maximum amount that parents of disabled children will be able to receive under the new childcare scheme starting in the autumn will be increased from £2,000 to £4,000 a year for each disabled child.

Company car benefit

From 2019/20 the scale percentage of the list price of company cars that are subject to tax will be increased by 3% up to a maximum of 37% for cars emitting more than 75g/km of CO2. There will be a 3% differential between the 0–50g/km and 51–75g/km bands and between the 51–75g/km and 76–94g/km bands. The rates for years up to 2018/19 are as previously announced.

Van benefit charge (VBC)

From 6 April 2016 the main VBC will increase in line with RPI. As previously announced, lower rates of VBC for zero emission vans will be extended to 5 April 2020 on a tapered basis.

Fuel benefit charge

From 6 April 2016 the fuel benefit charge multiplier for both cars and vans will increase in line with RPI.

Tax returns and tax payment

During the next parliament, digital tax accounts will be introduced to remove the need for individuals and small businesses to complete annual tax returns. Further details about the policy and administrative changes will be published later in 2015. Over the summer there will also be consultation on a new payment process to enable tax and NICs to be collected via digital accounts.

Employee benefits and expenses

From April 2015 there will be a statutory exemption for employees’ trivial benefits-in-kind costing less than £50, as previously announced. An annual cap of £300 will also be introduced for directors and other office holders of close companies and employees who are family members of those office holders.

From April 2016, the £8,500 threshold below which employees do not pay income tax on certain benefits-in-kind will be removed and replaced with new exemptions for carers and ministers of religion. The current dispensation regime will be replaced with an exemption for certain reimbursed expenses and a statutory framework will be introduced for voluntary payrolling. The new exemptions for reimbursed expenses will not be available if used in conjunction with salary sacrifice.

SAVER – The new £5,000 0% starting rate band comes into being in 2015/16. If your earnings and/or pensions total not more than £10,600 you may be able to register to receive interest without deduction of tax.

Gift Aid small donations scheme

The maximum annual donation amount that can be claimed through the Gift Aid small donations scheme will increase from £5,000 to £8,000. This will take effect from April 2016, allowing charities and Community Amateur Sports Clubs to claim Gift Aid top-up payments of up to £2,000 a year.

 

budget

March 2015 Budget Summary

20 March 2015

Chancellor George Osborne delivered his sixth and final Budget of this Parliament. Whilst there were no pre-election give-aways there was a clear message for the public that he and his party were the people to trust in rebuilding the UK economy.

Summing up, he said: “Today I present the Budget of an economy stronger in every way from the one we inherited. The Budget of an economy taking another big step from austerity to prosperity.”

With so many announcements leaked in the days prior, there weren’t many surprises in the 2015 Budget but what were the key headlines for taxpayers:

Income tax

    • Personal allowance to be increased to £10,800 in 2016/17, £11,000 in 2017/18
    • The Chancellor also confirmed an increase in the threshold at which people pay the higher tax rate. This will increase from £42,385 to £43,300 by 2017-18, above the rate of inflation
    • Pensions lifetime allowance cut to £1m from April 2016
    • More flexibilities for ISAs (taking out & put back in the same year without affecting the annual limit)
    • Help-to-buy ISA: the Government will contribute an additional 25% to the amount saved by first time buyers towards a home deposit. The maximum is a £3,000 contribution added to £12,000 individual savings
    • Personal savings allowance (worth a maximum of £200) introduced from 2016/17

 Business taxes

  • Diverted profits tax from April 2015
  • Enhanced film & TV tax reliefs and introducing an orchestra tax relief
  • Confirmation that there will be no employer’s national insurance contributions for under 21 year olds (when paid less than £815 per week) from April 2015 and a similar relief for apprentices under 25 from April 2016
  • Some changes to VCT, EIS and SEIS schemes

 Non-residents and non-domiciliaries

    • Confirmation of CGT on non-UK residents selling UK residential property after 6 April 2015
    • Increases to the remittance basis charge for those who have been resident for 12 out of 14 years from £50,000 to £60,000 and a new £90,000 charge for those who have been resident for 17 out of 20 years

 

There was of course further anti-avoidance measures including closing perceived loopholes within the Entrepreneurs legislation which followed the earlier announcement in the Autumn Statement that Entrepreneurs relief would no longer be due on sales of goodwill by a sole trader or partner to their own trading company.

There had been some rumours that there would be changes to some IHT reliefs but the only announcement was a review on deeds of variation.

And finally we had had a lot of excitement in the office with the morning announcement of the end of the annual income tax return but the headline was perhaps more exciting than the detail. The aim however is for all taxpayers to have individual online accounts starting in 2016 with certain information pre-populated from information HMRC receives direct and the option for you to pay your tax early by instalments should you wish. As your agent we will have access to these accounts to keep your information up to date but there is still much detail yet to come. We can only hope HMRC do not try to rush this process and ensure their systems and their data collection processes are robust so there is no more time spent correcting the information than it currently takes to provide the data in an annual tax return.