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Post Budget update seminar Wednesday 25 March 2015
This document summarizes key points from the UK Budget 2015, including changes to personal and business taxes. Personal tax allowances will increase annually through 2017/18. The higher rate tax threshold will also rise each year. The government plans to phase out tax returns by 2016, replacing them with digital tax accounts. Business tax measures include reducing the corporation tax rate to 20% and raising the annual investment allowance.
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Post Budget update seminar Wednesday 25 March 2015
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- 2. #LBBudget15 POST BUDGET UPDATE Chinny’sCue Club Halesworth Wednesday, 25 March 2015
- 3. #LBBudget15 BRIAN BALE Partner T: 01986873163 E: b.bale@lovewell-blake.co.uk
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- 5. #LBBudget15 George Osborne’s View A growing economy National debt down as a share of the economy A record number of jobs Rising living standards The deficit is down “Britain is now walking tall again”
- 6. #LBBudget15 • “Here comesthe sun (or a least that’s what he wants you to think)” • “Extreme plan” ...future…“colossal spending cuts” • “Rollercoaster ride in public spending” The Guardian Ed Miliband The Times
- 7. #LBBudget15 Help for theNorth, what about the East?
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- 9. #LBBudget15 Personal allowances 2015/16 £10,600 2016/17£10,800 2017/18 £11,000
- 10. #LBBudget15 Higher rate threshold 2015/16£42,385 2016/17 £42,700 2017/18 £43,300
- 11. #LBBudget15 The end ofthe tax return? • How will it work? • Everyone will have a digital tax account • The national insurance contributions and pension position will be shown in the account • Any interest from the banks will also be shown
- 12. #LBBudget15 The end ofthe tax return? • Taxpayer logs on to check and confirm the details are complete and correct • Higher earners can add the additional information • Taxpayers can pay as they go (rather than having an annual large tax bill)
- 13. #LBBudget15 The end ofthe tax return? • The agent of the taxpayer can also be given access • The timetable is as follows: – Early 2016 - £5m small businesses and £10m individuals to have access – By 2020 more than £50m individuals and small businesses will have access
- 14. #LBBudget15 The end ofthe tax return? • Rental income/dividend income etc will need to be reported • How accurate will reporting be? • Paper returns will still be available
- 15. #LBBudget15 National insurance • Class2 national insurance will be abolished in the next Parliament • Reform of class 4 • Consultation on the detail and timing later in year
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- 17. #LBBudget15 Help to buy- ISA • For every £200 a first time buyer saves, the Government will add £50 • Maximum bonus is £3,000 on £12,000 of savings • Available for four years from Autumn 2015 • Initial deposit of £1,000 and then monthly savings • One per person (rather than per home)
- 18. #LBBudget15 Help to buy- ISA • Bonus is in range £400 to £3,000 • Available for home purchases of up to £450,000 in London and £250,000 outside London • The bonus is paid when the first home is bought
- 19. #LBBudget15 Personal Savings Allowance IncomePersonal savings allowance Up £16,800 No tax on savings income £16,801 to £42,700 £1,000 From £42,701 to £150,000 £500 Over £150,000 of income NIL
- 20. #LBBudget15 Personal Savings Allowance •The banks and building societies will stop deducting 20% in income tax from non-ISA savings • More will be paid through self-assessment for those with high interest
- 21. #LBBudget15 Annuities • From April2016 people receiving an annuity can assign the income to a third party in exchange for a lump sum or alternative retirement product
- 22. #LBBudget15 ISAs • From summer2015 investments in quoted bonds from smaller companies can be held in an ISA • Also equity securities in crowdfunding platforms • Response to consultation on peer-to–peer loans • Can withdraw and replace money from a cash ISA
- 23. #LBBudget15 Pensions • The lifetimeallowance is to be reduced from £1.25m to £1m from 6 April 2016 • Indexed with CPI after 2018
- 24. #LBBudget15 Inheritance tax • Deedof variation • Consultation over the next few months • Increases importance of making sure that Wills are in the right form
- 25. #LBBudget15 Other matters • Farmersaveraging – over five years • Changes to VCTs and EIS • Personal service companies/umbrella companies – travel and subsistence
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- 27. #LBBudget15 Entrepreneurs’ Relief • ERdenied on disposal of company that is not a trading company in its own right (joint ventures) • Also denied on the sale of a personal asset unless 5% of the shares in the company are sold
- 28. #LBBudget15 Entrepreneurs’ Relief • Goodwillon incorporation • ER kept where deferred into EIS etc
- 29. #LBBudget15 Residential property – non-residents •Capital gains tax of 28% or 18% (or 20% if held by a company) on sale of residential property by a non-UK resident • PPR relief restricted on properties in countries in which owner is not resident
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- 31. #LBBudget15 Corporation tax • Reminderof the rates: –20% from April 2015 • Associated companies rules simplified • Based on 51% group ownership from 2015 • Relevant for quarterly instalments
- 32. #LBBudget15 Corporate tax – capitalallowances • Current AIA is £500,000 • Due to decrease from 31 December 2015 to £25,000 (new rate to be announced in the Autumn?) • Beware restriction for spend as we get nearer to the end of year • Seek advice before major acquisitions
- 33. #LBBudget15 Corporate tax –AIA rates (companies) Prior to 1 January 2013 1 January 2013 to 31 March 2014 1 April 2014 to 31 December 2015 From 1 January 2016 £25,000 £250,000 £500,000 £25,000
- 34. #LBBudget15 Corporate tax – Restrictionfor Goodwill • Restricted relief where acquired from a related party –Eg customer lists –Personal goodwill • Acquisitions on or after 3 December 2014
- 35. #LBBudget15 Corporation tax – R&Dtax credit • Research and development tax credits • Rate of enhancement from 225% to 230% from 1 April 2015 • Either the amount of costs deducted can be enhanced or a tax repayment claimed
- 36. #LBBudget15 Corporation tax – R&Dtax credit • Repayment is 14.5% of the loss for SMEs • Repayment will be 33.4p rather than 32.6p • Voluntary advance assurance process for first claims for SMEs • Further guidance to be issued
- 37. #LBBudget15 Business rates • Reviewbeing carried out • Current system does not take account of state of economy etc • ‘Bricks and mortar’ businesses at a disadvantage? • Results to be announced in Budget 2016
- 38. #LBBudget15 “Google tax” • Taxon diverted profits • 25% rate on profits made in the UK and diverted abroad • Expected to raise £1bn over five years • Higher than corporation tax rate to encourage companies to register in the UK
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- 40. #LBBudget15 Budget 2015 • From1 April 2015 – VAT registration threshold rises to £82,000 – Deregistration threshold rises to £80,000
- 41. #LBBudget15 Budget 2015 • Beerduty down 1p per pint from 23/3/15 • Cider and spirits duty down 2% from 23/3/15 • Duty on wine is frozen • Tobacco duty increase of 16p per packet of 20 • Fuel duty increase set for September 2015 is cancelled
- 42. #LBBudget15 Budget 2015 • Palliativecare charities and medical courier charities – From 1 April 2015 – Section 33 bodies – Can reclaim VAT on non-business activities – Submission of regular claims in certain format to HMRC
- 43. #LBBudget15 Budget 2015 • Partialexemption calculations – UK business with foreign branch making supplies of financial services outside EU – Income classed as “taxable” – Boosts partial exemption recovery rate – From 1 August 2015 such income is excluded
- 44. #LBBudget15 Budget 2015 • Airlinepassenger duty • Landfill tax • Climate change levy – All to increase by retail prices index on 1 April 2016
- 45. #LBBudget15 Budget 2015 • Aggregateslevy remains £2 per tonne • Rural fuel rebate scheme extended to 17 areas in the UK from 1 April 2015, but not East Anglia
- 46. #LBBudget15 Other VAT Changes •MOSS (mini one stop shop) commenced 1/1/15 – E-services – sold to private individuals – Within the EU
- 47. #LBBudget15 Other VAT Changes •E-service examples – Apps – E-books – On-line training – Music and video downloads – Broadcasting – Telecommunications
- 48. #LBBudget15 Other VAT Changes •28 member states • VAT registration due £1+ • MOSS allows registration in one EU country • One VAT return accounting for all EU sales • Pay VAT to HMRC, no reclaim of costs • No accounting for UK sales if under VAT limit
- 49. #LBBudget15 Autumn Statement 2014 •Search and rescue bodies – From 1 April 2015 – Section 33 body – Reclaim of UK VAT non-business costs
- 50. #LBBudget15 Conservatives Business Tax • Corporationtax –In 2010 (when the Conservatives came to power) the CT rate was 28% –Gradual reduction in rates
- 51. #LBBudget15 Conservatives Business Tax • Corporationtax –With effect from 1 April 2015 main rate of CT is 20% –Suggested policy to reduce the CT rate further –“Most competitive in the G20”
- 52. #LBBudget15 Conservatives Personal Tax • Incometax –Personal allowances • In 2010 PA was £6,475, steady increase during the current parliament • For 2015/16 the PA is £10,600
- 53. #LBBudget15 Conservatives Personal Tax • Incometax –Personal allowances • PA will potentially be increased to £12,500 by 2020 • 2010/11 the PA was tapered away for those earning in excess of £100,000 no sign it will be re-introduced
- 54. #LBBudget15 Conservatives Personal Tax • Incometax –Basic rate band • 40% tax rate at £31,865 (2014/15) • Potentially raising 40% tax rate threshold to £50,000 by 2020
- 55. #LBBudget15 Conservatives Personal Tax • Incometax – Inheritance tax • Nil rate band is currently £325,000 with effect from 2009/10 • Raising the threshold to £1m has been discussed • Should the family home be within the charge to IHT
- 56. #LBBudget15 Liberal Democrats Business Tax •Corporation tax –Introduction of a Bank levy at 8% –Additional to the existing bank levy –Clamp down on corporate tax evasion
- 57. #LBBudget15 Liberal Democrats Personal Tax •Income tax –Personal allowances • Increase to £11,000 in first year of government • Potentially rising to £12,500 by 2020
- 58. #LBBudget15 Liberal Democrats Personal Tax –Capital gains tax • Current rate of capital gains tax is 18% or 28% depending upon marginal rate of income tax • Pledge to increase higher rate to 35% • Potentially reduce the annual exemption currently at £11,000 (2014/15) to £2,500
- 59. #LBBudget15 Liberal Democrats Personal Tax •Income tax – Mansion tax • An annual tax on properties worth over £2m • 0.5% of home affected • 50% of London houses valued at over £2m owned by overseas investors • £2m will rise with inflation
- 60. #LBBudget15 Labour Party Business Tax •Business rates – Premises rateable value of £50,000 or less • Rate cut 2015/16 • Rate freeze 2016/17 – Impact 1.5m small business • Corporation tax – Reverse the 1% reduction to 20% to be introduced April 2015
- 61. #LBBudget15 Labour Party Personal Tax •Income tax –George Osborne abolished 50% rate 2013/14 –Reintroduce 50% top rate for those with income in excess of £150,000 –Reintroduce 10% starting rate
- 62. #LBBudget15 Labour Party Personal Tax •Mansion tax –Properties worth over £2m –Deferral for those earning less than £42,000 a year –“simple” system of bands relying on self- valuation
- 63. #LBBudget15 Labour Party Personal Tax •Pensions tax relief –Propose to reduce tax relief on pensions for those earning over £150,000 –Tax relief at 20%
- 64. #LBBudget15 Labour Party Personal Tax •Pensions tax relief –Reduce the annual allowance from £40,000 to £30,000 –Reduce the lifetime allowance from £1.25m to £1m
- 65. #LBBudget15 UKIP Business Tax • Turnovertax –Consider introducing a flat rate tax calculated as a percentage of turnover
- 66. #LBBudget15 UKIP Personal Tax • Incometax – Personal allowance • Raise to £13,500 by 2020 • Tax rates – Introduction of 35% rate for those earning between £42,285 and £55,000 • Inheritance tax – Abolished!
- 67. #LBBudget15 Green Party Business Tax PersonalTax • Tax rates – Introduction of 50% tax rate for those earning in excess of £100,000 • Wealth tax – Introduction of 1% to 2% tax on those worth £3m or more
- 68. #LBBudget15 SNP Business Tax • Corporationtax – Stepped away from Alex Salmond’s 3% cut to CT Personal Tax • Income tax – Increase for those earning £100,000 per annum
- 69. #LBBudget15 SNP Personal Tax • Transactiontax on property –Replaces stamp duty in Scotland from 1 April 2015 –Original announcement was 10% on properties valued between £250,000 and £1,000,000 –Revised down to 5% for lower value properties
- 70. #LBBudget15 Election tax planning Capitalgains tax • Entrepreneurs’ Relief Limits Rate Pensions • Maximum contribution now / include unused carry forward allowance
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