Now that the dust has settled after the Chancellor delivered his last Budget before the elections take a look to see what parts affect the tax you and your business pay:
2015 Budget highlights
- The personal allowance will increase to £10,600 from April 2015. This will rise to £10,800 for 2016/17 and £11,000 for 2017/18.
- An above inflation rise in the threshold for the higher rate tax to £42,700 in 2016/17 and to £43,300 in 2017/18.
- Married couple allowance applies from 6 April and allows for the transfer of £1,060 of a personal allowance to a spouse or partner where the transferor’s income is less than £10,600 and the recipient doesn’t pay tax at the higher or additional rate.
- During the next Parliament the removal of the requirement to complete and annual Tax Return.
- Class 2 National Insurance contributions for the self-employed are to be abolished in the next Parliament.
- From the 2015-16 tax year onwards the collection of Class 2 NICs will be through self-assessment (SA), allowing the self-employed to pay their income tax and Class 2 and Class 4 NICs together through one process.
- Employer National Insurance for under 21’s to be abolished from April 2015 and to extend to young apprentices from April 2016.
Savings and Pensions
- Annual savings limit for ISA’s to increase to £15,240
- The government aims to introduce regulations in Autumn 2015 which will make IAS’s more flexible by enabling ISA savers to withdraw and replace money from their cash ISA without it counting towards their annual ISA limit.
- The government is also proposing to introduce a new scheme which provides a government bonus to each person who saves on a ‘Help to Buy’ ISA at the point they use the ISA to purchase their first home. This means for every £200 saved the government will top up with £50 (however this will be capped).
- The government is aiming to add in a future Finance Bill the introduction of a personal savings allowance of £1,000 for basic rate tax payers. This means that savers will be able to have the first £1,000 of interest on savings tax free.
- The lifetime allowance for pension contributions is to be reduced from £1.25m to £1m from 6 April 2016.
- The main rate of corporation tax is to be reduced to 20% for the 2016 financial year. The small profits rate will remain at 20%.
- The annual investment allowance is £500,000 per annum and is available for companies and for unincorporated businesses up to 31 December 2015. It will revert back to £25,000 per annum with effect from 1 January 2016 unless reviewed and changed by the next government.
- From 6 April 2015 the ‘employment allowance’ relief will be available to individuals who employ care and support workers. Employers will be entitled to deduct up to £2,000 per annum from their liability to pay secondary Class 1 (‘employer’) National Insurance contributions (NICs).
- From the 1 April 2015 the Research & Development expenditure credit will increase from 10% to 11% and the SME scheme super deduction from 225% to 230%. Also from 1 April 2015 qualifying expenditure for Research & Development tax credits will be restricted so that the costs of materials incorporated in the profits that are sold are not eligible.
From 1 April 2015 the government is:
- Increasing the business rates discount for smaller retail premises with a rateable value of £50,000 or below to £1,500 to 31 March 2016
- Doubling small business rate relief for a further year to 31 March 2016
- Capping the rise in the business rates multiplier at 2%
- Extending transitional rate relief to support 16,000 small business facing significant rates bill increases due to the ending of transitional rate relief.
- The VAT rate will remain at 20%
- The registration threshold is to increase to £82,000 for 2015/16 (from £81,000).
- The deregistration threshold is to increase to £80,000 for 2015/16 (from £79,000).