The Chancellor of the Exchequer used the final Budget before the General Election in the UK to unveil some significant tax changes. However, most of these are promises for the future:
- The increases in the Personal Allowance to £11,000 are staged in the 2016-17 and 2017-18 tax years as are the increases to the Higher Rate tax threshold.
- From April 2016, the Personal Savings Allowance will be a tax-free allowance of £1,000 for standard rate tax payers (or £500 for higher rate taxpayers) for the interest earned on savings.
- The accounts are expected to be available by autumn 2015 for the Help to Buy ISA where the government will contribute an additional £50 for every £200 saved up to a maximum contribution of £3,000.
- The reform of ISAs to allow monies to be withdrawn and re-deposited in the same tax year without losing the tax benefit is scheduled for autumn 2015.
- From April 2016, pensioners with existing annuities will be able to trade them for cash sums with tax applied at the marginal rate.
- The abolition of the paper Self-Assessment Tax return to be replaced by digital tax accounts for individuals and small businesses will be ‘over the next Parliament’ which means by 2020. The performance of other government programmes that relied on massive IT infrastructure changes makes even this an optimistic target.
There are some measures that have come into immediate effect such as the cut in the duty on beer and spirits.
In addition, a number of measures from previous Budgets come into effect from April 2015 the most noteworthy being:
- For employees aged under 21 on 6th April 2015, employers will no longer need to pay Employer National Insurance contributions on their annual earnings up to the £42,385.
- The Corporation Tax rate is unified at 20% for all businesses ending the reduced rate for small businesses and Marginal Relief.
- Pension flexibility comes into effect for individuals reaching the normal pensionable age so that they are no longer required to purchase an annuity but can withdraw lump sums taxed at the marginal rate.
- Registration is open for the Marriage Allowance that enables a spouse or a civil partner to transfer up to £1,060 of their Personal Allowance to their partner so long as their income is less than £10,600 and their partner’s is less than £42,385.
If you would like to discuss how the Budget 2015 or the new measures that come into effect from April 2015 affect you, please email us at firstname.lastname@example.org for an initial consultation that is free and without obligation.