What does the budget means for you and your clients and, importantly, any tax planning opportunities for high net worth individuals and business owners. Most observers do not believe that further curbs on public spending can reduce our debts to an acceptable level, thus suggesting that George will have to increase taxes in a way that will not hurt the average citizen. It also suggests that hopes of reforms that reduce tax yields are likely to prove unrealistic. In particular, an increase in the IHT limit (other than the promised limited relief for family homes) seems unlikely. We also expect further pain for non-doms and tax avoiders. We think that some tax relief for small businesses is likely, but as such businesses create scope for tax evasion and avoidance, we are sceptical as to how helpful these are likely to be in practice.

1. The Summer
Budget
14 July 2015

2. A viscous and silly budget?
OR
A landmark budget that sought to grasp firmly a
number of nettles in the tax and welfare world?

3. The Highlights (or lowlights)
• The attack on non-doms
• The additional main residence nil rate band
• Withdrawal of amortisation relief on goodwill
• Taxing dividends
• Pension changes
• Buy to let landlords
• The Annual investment Allowance

4. The attack on non-doms
Long-term non-doms (resident for over 15 of last 20 years)
•Taxable on worldwide income and gains
• And on benefits from excluded property settlements
• Liable to IHT on worldwide assets
• Does not affect domicile of children under 15
• Applies from 2017/18
• No grandfathering; no transitional rules
• Consultation later in year
• Make gifts now?
• Create an excluded property settlement?
• Gift to a charitable trust?

5. The attack on non-doms - 2
Non-doms with UK domicile of origin
• Taxable on worldwide income and gains for any year that they
are UK resident
• And liable to IHT on worldwide assets if they are resident here
• Conservative party message for those who leave the UK to make
their fortune abroad:
- Good riddance, we don’t want you back
• Tory message to multinationals:
- don’t send back executives who were born here – We
would like you to set up a business here but just don’t staff
it with Englishmen

6. The attack on non-doms - 3
Other non-doms
• Applies to all non-doms, not just those resident here
• Applies from 6 April 2017
• HMRC will consider whether costs of de-enveloping
are a disincentive
• DTR agreements may give protection
• Shares in an Offshore company owning UK residential
property will be regarded as a UK asset for IHT
• But only to the extent that the value is attributable to such
property

7. The additional main residence nil rate band
An extra £175,000 nil rate band so that a married couple can pass
on £1 million to their children without IHT
Well, in 2021 that is! The extra amount is being
phased in:
• 2017/18 £100,000
• 2018/19 125,000
• 2019/20 150,000
• 2020/21 175,000
• 2021/22 onward 175,000 indexed in line
with CPI

8. The additional main residence nil rate band – 2
The details - 1
• Only available to someone with children
• Only available on a gift of the person’s main residence to
descendants
• Available from 8 July 2015
• Can apply to only one house
• If a deceased held more than one house the executors
can decide which qualifies
• It does not need to have been a residence at the date of
death
• But it must have been one at some time in the period of
ownership

9. The additional main residence nil rate band – 3
The details - 2
• Any unused allowance at death can be claimed by the
surviving spouse
• The relief does not apply on lifetime transfers
• The relief will be available even where no house is held
at the date of death
• Provided that a house was owned sometime in the
past and “assets of an equivalent value” are passed on
death to direct descendants
• Descendants includes adopted children and step-
children

10. The additional main residence nil rate band – 4
The details - 3
•The relief is limited to the net value of the property, ie
after deducting any mortgage
• But it appears that it is deducted before the main nil
rate band
• The relief is phased out where the net value of the
estate (not that of the property) exceeds £2 million
• The reduction is £1 for every £2 of the excess, so it
does not apply at all to an estate of over £2.35 million

11. The additional main residence nil rate band – 5
Tough luck on those:
• Who don’t want to give the house to children in case
they evict the spouse
• Who have dependents other than children
• Who leave their money via a will trust?
• Who have a large mortgage
• Who have not arranged their life assurance so that it
bypasses the estate
• Who don’t have children
• There will be a consultation paper in September

12. Withdrawal of corporate amortisation of goodwill
• Mr Osborne thinks that the purchase of a business
rather than the company that owns it is done purely for
tax avoidance to get relief for amortisation of goodwill
• Accordingly companies will no longer be able to amortise
purchased goodwill bought after 7 July 2015
• Or other “customer-related” assets such as customer
lists

13. Withdrawal of corporate amortisation of goodwill - 2
•The sale proceeds of goodwill will still be taxable
as income
• The cost can be deducted at the time of sale –
but not so as to create a trading loss
• Any loss will be treated as a non-trading debit

14. Withdrawal of corporate amortisation of goodwill - 3
It can still be sensible to buy the company
because of:
• Uplift in value of other CGT assets
• Capital allowances
• Avoids risk of hidden liabilities

15. Taxing dividends
The new system from 6 April 2016
• Tax credit to be abolished
• First £5,000 of dividend will be exempt
• Any excess will be taxable at a special rate:
Basic rate taxpayer 7.5%
Higher rate taxpayer 32.5%
Additional rate taxpayer 38.1%

16. Taxing Dividends - 2
• Funds the 1% reduction in corporation tax
• Big companies and economists will like it
• Small companies who pay dividends in lieu of
salaries may not
• The break even point is around £22,000 of
dividend income
• Below that you will be better off; above it worse
off

17. Taxing Dividends - 3
• The increase is an effective 7.5% on the excess
over £5,000
• Arithmetically it is still cheaper in tax terms to
pay a dividend than remuneration

18. The pension changes
• Sales of existing annuities deferred to 2017
• From 2016/17 taxable lump sum death benefits will
be taxable at beneficiary’s marginal rate (45% for
a trust or company)
• Annual allowance remains £40,000
• But for 2016/17 onwards it will be tapered to:
£10,000 where the individual’s income exceeds
£150,000 (including value of employer pension
contributions)
• Will taper £1 for every £2 excess – so £10,000 figure
will be reached at £210,000 of income
• Will require pension input period to become the tax
year
• Lifetime allowance reduces to £1 million from
2016/17

19. Letting residential property
Tax relief for interest etc
• Interest relief (and for other financing costs) at
basic rate only
• Applies only to residential property
• Position on mixed property is unclear
• Reduction will be phased in:
2016/17 full relief
2017/18 full relief on 75% (effective rate 35%)
2018/19 full relief on 50% (effective rate 30%)
2019/20 full relief on 25% (effective rate 25%)
2020/21 relief at 20% only

20. Letting residential property - 2
Wear and tear allowance
• The 10% notional wear and tear allowance on
furnished lettings will not apply after 2015/16
• Instead landlord can deduct actual cost of
replacing furnishings

21. The Annual Investment Allowance
On most plant and machinery
• Increases/reduces to £200,000 for expenditure
from 1 January 2016
• This is described as a permanent increase

22. The Other Measures
Income Tax
•Tax lock
•Personal Allowance Income tax bands
•The starting rate of savings tax
•Personal savings allowance
•2015 London Anniversary Games
•Tax exemption for travel expenses of members
of local authorities

23. The Other Measures
Income Tax - 2
•Review of employee benefits and expenses
•Employment intermediaries and tax relief for travel and
subsistence
•Rent a room relief
•Amendments to tax-advantaged venture capital schemes
•Sporting testimonials
•Extension of averaging period for farmers

24. The Other Measures
Corporation tax
•Rates
•Modernising the taxation of corporate debt
•Payment dates
•Research and development tax credits:
• universities
• and charities
•Simplifying the link company requirements

25. The Other Measures
Corporation Tax - 2
•Controlled Foreign Company: Loss restriction
•Bank corporation tax surcharge
•Bank levy reform
•Restructuring tax relief for banks’ compensation payments
•Scottish Savings Bank
•Updating bank definitions

26. The Other Measures
Capital Gains Tax
• Carried interests of investment managers

27. The Other Measures
Inheritance Tax
•Nil rate band
•Emigration
•Simplifying changes on trusts
•Pilot trusts
•Claims for conditional exemption
•Life interest of surviving spouse
•Appointment to surviving spouse
•Late payment interest

28. The Other Measures
Administration
•Direct recovery of tax debts
•Simplification of HMRC debtor and creditor
interest rates
•Tackling offshore evasion
•Tackling the hidden economy
•Additional compliance resources for HMRC

29. The Other Measures
Other Taxes
• National Insurance: Employment Allowance
• Insurance premium tax: Rate increase
• Aggregates levy: Exemption re-instated
• Climate Change Levy: Green relief withdrawn
• Vehicle Excise Duty: New system from 1 April 2017

30. Robert Maas
Tax Consultant & Tax Expert
Robert is a giant in the tax world. He is widely regarded as one of the leading tax
practitioners in the UK and is a long-standing tax commentator. He has authored
extensively on tax and is always a draw card speaker.
The announcement that Robert had won the 2013 Lifetime Achievement Award was met
with a standing ovation. Robert is well-loved and much respected – with good reason.
Amongst other roles, Robert is a member of the Technical Committee of the ICAEW Tax
Faculty.
t: +44 (0)20 7309 3800
robert.maas@cbw.co.uk

31. Thomas Adcock
Tax Partner
Thomas is a specialist in helping businesses to understand the tax implications of their
actions. He works closely with entrepreneurs to manage their tax liability when engaging
in property deals, M&A, re-organisations, growth, international deals or when simply
looking to improve their tax efficiency.
He also works with ambitious and successful individuals who wish to build, spend or share
their personal wealth tax efficiently.
t: +44 (0)20 7309 3856
thomas.adcock@cbw.co.uk

32. Andy White
Tax Partner
Advising clients on their strategic tax affairs is Andy’s specialist area. He combines his deep
technical knowledge and creativity to deliver real taxation solutions that advance clients’
commercial and personal interests.
With 30 years’ general practice experience, including advising on flotation's, MBOs and
secondary buyouts, Andy makes an excellent advisor to most businesses experiencing
rapid growth or considering strategic changes.
t: +44 (0)20 7309 3917
andy.white@cbw.co.uk

33. CBW
66 Prescot Street
London
E1 8NN
t: + 44 (0)20 7309 3800
f: + 44 (0)20 7309 3801
e: info@cbw.co.uk
w: cbw.co.uk
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