2015 Budget in brief08 Jul 2015
Following today’s budget, we have prepared a review of the key points as broken down into the main areas that we believe may affect our clients.
• Corporation tax to be cut to 19% in 2017, followed by a cut to 18% in 2020.
• Permanent ‘non-dom’ statuses are to be abolished. From April 2017, anyone who has lived in the UK for 15 of the past 20 years will pay the same level of tax as any other UK citizen.
• HMRC will be focusing further on clamping down on tax avoidance and tax evasion, with a budget increase of £750m.
• The bank levy rate is to be gradually reduced over the next six years and a new 8% surcharge on bank profits will be introduced from January 2016.
• The Chancellor announced a cap on charges imposed by claims management companies.
• There will be an increase in insurance premium tax to 9.5% from November 2015.
• A consultation will take place on changing Sunday trading laws
• A new apprenticeship levy is to be introduced for large employers
• A new national living wage is to be introduced. It will apply to over-25s and will start next year at £7.20, rising to £9.00 by 2020. Small firms’ national insurance contributions will fall, with a £3,000 employment allowance, so that small firms can hire four staff on the national living wage and pay no national insurance.
• The annual investment allowance, which was a temporary tax break for firms, will be set at £200,000 permanently from January 2016.
• Inheritance tax (IHT) threshold will be increased to £1m from 2017 (combined allowance for a husband and wife). Currently, each individual has a personal IHT allowance of £325,000, or a combined allowance of £650,000 between spouses. IHT of 40% applies to the value of estates above this amount. The Conservatives’ new plan is to create an extra tax-free band worth £175,000, or £350,000 between spouses, which would apply to main residences.
• Tax-free personal allowance to be raised to £11,000 next year. After that the personal allowance will rise in line with inflation.
• Higher rate threshold to rise to £43,000 next year.
• Mortgage interest relief for buy-to-let homebuyers, is to be restricted to basic rate of income tax.
• Annual tax relief on pension contributions is to be limited to £10,000 a year.
Tax and Duties
• There will be no rise in fuel duty.
• Major reform to vehicle excise duties to pay for a new road-building and maintenance fund in England.
• The annual household benefit cap will be reduced throughout Britain.
The State of the Economy
• Osborne has vowed to create a “Northern Powerhouse” by devolving powers from Westminster and investing in transport and other infrastructure projects in the North of England.
• Economy grew by 3% in 2014.
• The Chancellor predicts a 2.4% growth forecast in 2015.
• A predicted one million extra jobs to be created by 2020.