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Mike's View

As this was the last budget before the general election it contained a mix of measures that will come into effect on 6th April, measures with cross-party agreement that will come into effect at a later date regardless of the result of the election, and measures that will only see the light of day if the Tories remain in power after the election.

 Many of the changes that will come into effect on 6th April were announced in the Autumn Statement at the end of last year or even earlier. This includes the introduction of capital gains tax on the disposal of UK residential property by non-residents, changes to the tax payable by non-domiciled individuals claiming the remittance basis of taxation and the introduction of a single rate of corporation tax of 20%.

 Individuals

 The Chancellor has confirmed that the personal allowance for the year ended 5th April 2016 will be increased to £10,600 followed by increases in the following two years to £10,800 in '2016/17' and then £11,000 in '2017/18'. The basic rate of income tax will be charged on income of up to £42,385 in '2015/16' increasing to £42,700 in '2016 17' and £43,300 in '2017 18'. The upper threshold for the main rates of National Insurance will increase to stay in line with the higher rate tax threshold throughout.

 Pension and Savings

 Further reforms have been announced to the taxation of pensions and the government will legislate from April 2016 to enable people who are already receiving pension income in the form of an annuity to agree with their annuity provider to receive a lump sum from a third party in exchange for their continuing annuity income.

 At the same time the lifetime limit for pension contributions will be reduced from £1.25 million to £1 million.

 Changes are to be made to the ISA regulations to extend the range of qualifying investments and to enable individuals to withdraw and then replace money in an ISA without it counting towards their ISA limit for that year. There will also be a new help to buy ISA that will assist first-time buyers using their ISA savings to purchase their first home. For every £200 saved the government will provide a £50 bonus up to a maximum of a £3,000 bonus on £12,000 of savings.

 A new savings allowance will be introduced on 6 April 2016 to remove tax on up to £1,000 of savings income for basic rate taxpayers and up to £500 for higher rate taxpayers. At the same time the government are to remove the requirement for banks and building societies to deduct basic rate tax from any interest that they pay to individuals.

 Business

 A change that will be of benefit to many farmers is that in future they will be able to average their profits for tax purposes over a period of five years as compared to the current averaging period of just two years.

 With effect from 1 April 2015 the VAT registration threshold will be increased from £81,000 to £82,000 and the deregistration threshold from £79,000 to £80,000.

 The current limit of £500,000 on capital expenditure qualifying for the 100% annual investment allowance is due to fall to just £25,000 on first January next year. It has been announced that although there will be a reduction in the maximum amount it will not fall as low as £25,000 and further details will be announced on this in the Autumn statement later this year.

 The government has announced that during the life of the next parliament class 2 national insurance contributions for the self-employed will be abolished and they will be replaced by reformed class 4 National Insurance contributions that will include a contributory benefit element.

 The Chancellor also made a number of announcements regarding further tightening up of the rules on tax avoidance.

 The government have also announced a plan to abolish the requirement for most people to submit an annual tax return during the lifetime of the next Parliament. A consultation document has been published today setting out how the government hopes to achieve this somewhat ambitious goal.

 More to come from Moore (South) over the next few days.


Michael Wakeford
[email protected] 01243 531600