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.