Archive - publications in 2015

Check back here regularly to find out what's happened previously at our company and in the financial environment.

News Item - November 2015. 

 

A brief summary of the Chancellor's Autumn Statement on Wednesday 25th November 2015:

  • SDLT - From 1st April 2016, an extra 3% residential stamp duty land tax will be applied on the purchase of "buy to let" and second properties

  • Deeds of Variation - their use will continued to be monitored, but currently no restrictions are planned

  • Salary Sacrifice - these arrangements are certainly high on the hit list of HMRC; data will be collated from employers so that Treasury policy action can probably be expected rather sooner than later 

  • Farmers Averaging - after deliberations, the average period will be increased from 2 to 5 years from April 2016

  • GAAR - General Anti Abuse Rule - a new penalty of 60% of the tax will be imposed on all successfully prosecuted cases

  • Company Distributions - a consultation will shortly be commenced on the current rules and into attempts to convert income into capital

  • Disguised Remuneration - although effective from 25th November 2015, a consultation will commence in due course to confront cases where earned income liable to tax is avoided

  • Entrepreneurs Relief - Government will evaluate possible changes to the recent FA 2015 (ER) amendments; to disallow ER relief where "contrived structures" are being used to side step the latest changes 

  • From 2017/2018 - SDLT - proposed that the current payment time limit be reduced from 30 to 14 days

  • From 2019/2020 - CGT - payments on account due on the disposal of residential property will be due within 30 days of completion. (To bring the rules for UK residents in line with those recently introduced for non-residents). However, gains covered by PPR  (Private Residence Relief) will not be affected

Please note that the above report is only our brief interpretation and understanding of the Government's budget proposals for the 2015 Autumn Statement, delivered to Parliament by George Osborne on Wednesday 25th November 2015. These provisions are normally confirmed upon the receipt of Royal Assent later in the year. Jonathan Davis and his associates can not be held responsible for any errors, omissions or changes to the above.

News Item - July 2015

 

A brief summary of the Chancellor's Budget Statement on Wednesday 8th July 2015:

  • The Personal allowance will be increased from £10,600 for 2015-16, and then to £11,000 for 2016-17.

  • The Basic rate limit is increased from £42,385 for 2015-16, and then up to £43,000 in 2016-17.

  • There will be an introduction of a new National Living Wage of over £ 9 an hour by 2020. Before that, from April 2016 a new NLW of £ 7.20 an hour for the over-25's will be introduced.

  • The Ministry of Defence's budget will rise by 0.5% above CPI each year to 2020-21. Up to an additional £ 1.5 bn a year will be available by that target year, to fund increased spending on both the military and defence agencies. The government will meet the NATO pledge to spend 2% of GDP on defence in every year of this decade.

  • The dividend tax credit (which reduced the tax paid on income from shares) will be replaced by a new £ 5,000 dividend allowance for all taxpayers from April 2016. Tax rates on dividend income above this new allowance will be increased to 7.5% (on basic rate payers), 32.5% (on higher rate payers) and 38.1% (on additional rate payers) .

  • Inheritance Tax is currently charged at 40% on estates over the tax free allowance of £ 325,000 per person, though married couples and civil partners can pass on any unused allowance to each other. However, from April 2017, each individual (with issue) will be able to utilise a family home allowance of £ 175,000, so that their property, up to value of £ 1,000,000 can be subsequently passed on to their children or grandchildren, tax free.   (i.e. £ 325,000 + £ 175,000 = £ 500,000 X 2 persons). Note that the additional allowance applies on the children/grandchildren, and  the allowance will be gradually withdrawn for estates valued in excess of £ 2,000,000.

  • From April 2016, the maximum tax free sum that people earning in excess of £ 150,000 per year can pay into a pension will be reduced. This contribution for most people is currently £ 40,000, plus allowances for up to 3 years unused carry forward. 

  • Corporation Tax will be reduced to 19% in 2017, then 18% in 2020 (was 28% in 2010). Over one million business will benefit.

  • The annual investment allowance will be permanently increased to £ 200,000 from January 2016. Subject to qualifying rules, businesses can take full tax relief in the year items are purchased, rather than over a number of years.

  • The Employment Allowance will increase from £ 2,000 to £ 3,000 in April 2016. Businesses will be able to employ 4 people full time on the National Living Wage, and pay no National Insurance at all.

  • The standard rate of Insurance Premium Tax will be increased from 6% to 9.5%, in November 2015.

  • "Buy-to-let" landlords: The tax relief on finance costs (mortgage interest) will be restricted down to 20% by April 2020. As from (a) 2017-18, the allowance = 75% finance costs + 25% basic rate; (b) 2018-19, allowance = 50% finance costs + 50% basic rate; (c) 2019-20, allowance = 25% finance costs + 75% basic rate; (d) 2020-21 onwards, all finance costs will be given at basic rate. Individuals will be able to claim a basic rate tax relief from their income tax liability, on the portion of finance costs not deducted in calculating the profit. Any excess finance costs may be carried forward to following years, if the tax relief has been limited to 20% of the profits of the business in the tax year. In addition, from April 2016 the "wear and tear" allowance, which gave relief whether justified or not, will be replaced by a new system, that allows relief only against actual expenditure on replacement furnishings.

  • Permanent "non-dom" status will be abolished from April 2017, for anyone who has been resident in the U.K. for 15 of the past 20 years. (Only then can they continue to avoid pay tax on offshore income, unless brought into the U.K.)

  • The Chancellor announced that the welfare system will be reformed to make it fairer for the taxpayers who pay for it, but whilst continuing to support the most vulnerable in society. The main items were (a) working-age benefits will be frozen for 4 years from 2016-17; (b) the household benefit cap will be reduced to £ 20,000 (£ 23,000 London); (c) support through Child Tax Credit will be limited to 2 children born before April 2017; (d) those aged 18 to 21 on Universal Tax Credit will have to apply for an apprenticeship or a traineeship, gain work based skills, or go on a work placement 6 months after the start of their claim; (e) rents for social housing will be reduced by 1% a year for 4 years, and tenants on higher incomes - £ 30,000 (£ 40,000 London) will be required to pay market rate, or near market rate rents. 

  • Banking reform: (a) new 8% tax on profits from January 2016; (b) phased reduction in rate of the Bank Levy, down from 0.21% to 0.1% between 2016 and 2021; (c) excluding U.K. banks' overseas subsidiaries from the Bank Levy from January 2021. 

 

Please note that the above report is only our brief interpretation and understanding of the Government's budget proposals for the 2015 Emergency Summer Budget, delivered to Parliament by George Osborne on Wednesday 8th July 2015. These provisions are normally confirmed upon the receipt of Royal Assent later in the year. Jonathan Davis and his associates cannot be held responsible for any errors, omissions or changes to the above.

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News Item - March 2015

 

A brief summary of the Chancellor's Budget Statement on Wednesday 18th March 2015:

  • The Personal allowance will be increased to £10,800 for 2016-17, and then to £11,000 for 2017-18.

  • The Basic rate limit is increased to £42,700 for 2016-17, and then up to £43,300 in 2017-18.

  • There will be an introduction of a new personal savings allowance of £1,000 for basic rate taxpayers (but restricted to £500 for higher rate taxpayers).

  • A new increased flexibility with ISAs, to enable withdrawal and replacement of money in the same tax year, but most importantly, without losing the tax advantage; also, the introduction of a new "help to buy ISA".

  • Abolition of the income tax self-assessment tax return, which will be replaced by a digital tax account.

  • Abolition of Class 2 NICs, to be enacted in the next Parliament.

Please note that the above report is only our brief interpretation and understanding of the Government's budget proposals for the 2015 Emergency Summer Budget, delivered to Parliament by George Osborne on Wednesday 8th July 2015. These provisions are normally confirmed upon the receipt of Royal Assent later in the year. Jonathan Davis and his associates cannot be held responsible for any errors, omissions or changes to the above.