2015 Budget Statement Highlights
19 March 2015 •
In the final Budget Statement of this Parliament, the Chancellor announced a number of new changes as well as reaffirming those introduced in his 2014 Autumn Statement. Here is our initial reaction and overview of some of the key points that could affect you and your business.
You can also watch our video round up featuring Damian Talbot and Francis Kershaw.
“Help to Buy” ISA – This was one of the key changes announced in the Chancellor’s Budget to give help to first time buyers in raising deposits for house purchases. Broadly, investments made into the ISA will be “topped up” by a 25% contribution from HMRC. The example given was £12,000 invested by the taxpayer will be uplifted by a £3,000 injection by the Government.
Entrepreneurs Relief Changes – The announcements made in the 2014 Autumn Statement regarding the restriction on the availability of E.R. to Goodwill recognised that incorporation of a business will be included within the Finance Bill 2015.
Personal Savings Allowance – The Chancellor announced that from April 2016 the first £1,000 of interest earned on cash deposits will be tax-free for basic rate taxpayers. This allowance will be restricted to £500 for higher rate taxpayers.
Class 2 National Insurance Contributions – This class of NIC currently paid by self-employed taxpayers is to be abolished over the next Parliament. However, Class 4 NIC, which is also paid by the self-employed, is to be reformed accordingly.
Remittance Basis Charge – As announced in the Autumn Statement, new rates for UK resident/non-domiciled individuals utilising the remittance basis will be introduced from 6 April 2015. Individuals who have been resident in UK for more than 17 of the last 20 years will now incur a £90,000 remittance basis charge if they wish to utilise the remittance basis.
In addition, the £50,000 remittance basis charge which is incurred by UK resident/ non-domiciles who have been resident in the UK for more than 12 years has been increased to £60,000.
Personal Allowance – The personal allowance is to increase to £10,800 from April 2016.
Lifetime Allowance – The Lifetime Pension Allowance is to decrease from £1.25M to £1M.
Annuity Changes – Pensioners are to be able to effectively “sell back” their annuities without incurring a punitive tax charge.
Inheritance Tax and Deeds of Variation – There is to be a review of the use of Deeds of Variation to mitigate Inheritance Tax obligations over the next Parliament. It is unclear at this time if this is to address specific contrived schemes or will be part of an overall review of IHT.
The end of the Annual Tax Return? – Over the course of the next Parliament the Treasury is intending to end the annual requirement to file tax returns for individuals. It is unclear how an alternative system might work and we await further information with bated breath.
If you would like to explore what this Budget Statement could mean for you and your business please call 020 7731 6163 to talk to one of our tax team, you can also download our updated 2015 / 2016 tax card.