Autumn Statement 2014 & Budget 2015 (Key Points)
1 Income Tax personal allowance in 2016-17 and 2017-18
The government will increase the Income Tax personal allowance to £10,800 in 2016-17 and £11,000 in 2017-18. In 2016-17 the basic rate limit will be £31,900 meaning that the higher rate threshold above which individuals pay income tax at 40% will be increased to £42,700. In 2017-18 the higher rate threshold will be £43,300. The National Insurance upper earnings and upper profits limits will increase to stay in line with the higher rate threshold.
2 Income Tax personal allowance in 2015-16
As announced at Autumn Statement 2014, the government will increase the Income Tax personal allowance to £10,600 from April 2015. The basic rate limit will be £31,785 so the higher rate threshold above which individuals pay Income Tax at 40% will be increased to £42,385. The National Insurance upper earnings and upper profits limits will increase to stay in line with the higher rate threshold. The basic, higher and additional rates of Income Tax for 2015-16 will remain at their 2014-15 levels.
3 Income Tax: extending averaging period for farmers
The government will extend the period over which self-employed farmers can average their profits for Income Tax purposes from 2 years to 5 years. The government will engage with stakeholders later in the year on the detailed design and implementation of the extension. This measure will come into effect from April 2016.
4 Blind person’s allowance, married couple’s allowance and income limit for 2015-16
As announced at Autumn Statement 2014, the government will increase the blind person’s allowance, married couple’s allowance and the income limit by amounts equivalent to the Retail Prices Index (RPI) in 2015-16.
5 Non domiciles: increasing the remittance basis charge
As announced at Autumn Statement 2014, legislation will be introduced in Finance Bill 2015 making changes to the charges paid by non-domiciled individuals resident in the UK who wish to claim the remittance basis of taxation. From April 2015, a new annual charge of £90,000 will be introduced for individuals who have been resident in the UK in at least 17 of the last 20 years, and the charge paid by individuals who have been resident in the UK in at least 12 of the last 14 years will increase from £50,000 to £60,000.
6 Class 2 National Insurance contributions (NICs)
As part of the planned reforms to tax administration, the government will abolish Class
7 Help to Buy: ISA
The scheme will provide a government bonus to each person who has saved into a Help to Buy: ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum of £3,000 on £12,000 of savings. Further details are provided in the document “Help to Buy: ISA” which is published alongside the Budget.
8 A new Personal Savings Allowance
The government will introduce an allowance from 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. Additional rate taxpayers will not receive an allowance. As part of these reforms, HM Revenue and Customs (HMRC) will introduce automated coding out of savings income that remains taxable through the Pay As You Earn system from 2017-18, with pilots starting in autumn 2015.
9 Lifetime Allowance for pension contributions
The government will reduce the Lifetime Allowance for pension contributions from £1.25 million to £1 million from 6 April 2016. Transitional protection for pension rights already over £1m will be introduced alongside this reduction to ensure the change is not retrospective. The Lifetime Allowance will be indexed annually in line with CPI from 6 April 2018.
10 IHT Deeds of variation
The government will review the use of deeds of variation for tax purposes.
11 Inheritance Tax changes to support the new digital service
As announced at Autumn Statement 2014, the government will make minor changes to legislation dealing with interest to support the introduction of the new Inheritance Tax (IHT) digital service announced in Autumn Statement 2013.
12 Capital Gains Tax entrepreneurs’ relief: contrived structures
– Joint Ventures and Partnerships
– Associated Disposal Rules
The government will deny entrepreneurs’ relief (ER) on the disposal of shares in a company that is not a trading company in its own right. The government will also prevent individuals from claiming ER on the disposal of personal assets used in a business carried on by a company or a partnership, unless they are disposed of in connection with a disposal of at least a 5% shareholding in the company, or a 5% share in the partnership assets. This affects disposals on or after 18 March 2015.
13 Capital Gains Tax entrepreneurs’ relief:
Restricting unfair tax advantages on incorporation
As announced at Autumn Statement 2014, the government has prevented individuals from claiming ER on disposals of the reputation and customer relationships associated with a business (‘goodwill’) when they transfer the business to a related close company. This affects transfers on or after 3 December 2014.
14 Capital Gains Tax entrepreneurs’ relief: deferral
As announced at Autumn Statement 2014, the government has allowed gains which are eligible for ER, but which are instead deferred into investments which qualify for the EIS or SITR, to remain eligible for ER when the gain is realised. This benefits qualifying gains on disposals that would be eligible for ER on or after 3 December 2014 that are deferred into EIS and SITR.
15 Capital Gains Tax for non-UK residents disposing of UK residential property
Following consultation the government has confirmed that from 6 April 2015 non-UK resident
individuals, trusts, personal representatives and narrowly controlled companies will be subject to Capital Gains Tax (CGT) on gains accruing on the disposal of UK residential property on or after that date. Non-resident individuals will be subject to tax at the same rates as UK taxpayers (28% or 18% on gains above the annual exempt amount). Non-resident companies will be subject to tax at the same rates as UK corporates (20%) and will have access to an indexation allowance. Full details were set out in the response document ‘Implementing a capital gains tax charge on non-residents – summary of responses’, published on 27 November 2014.
16 Capital Gains Tax:
Private residence relief (PRR) on properties located in other jurisdictions
The government will restrict access to PRR in circumstances where a property is located in a
jurisdiction in which a taxpayer is not tax resident. In those circumstances, the property will only be capable of being regarded as the person’s only or main residence for PRR purposes for a tax year where the person meets a 90-day test for time spent in the property over the year.
17 Capital Gains Tax: Annual Tax on Enveloped Dwellings (ATED)
As announced at Budget 2014, the government will extend the related CGT charge on disposals of properties liable to ATED with effect from 6 April 2015 to residential properties worth over £1 million and up to £2 million and with effect from 6 April 2016 to residential properties worth over £500,000 and up to £1 million.
18 Capital Gains Tax: wasting assets
The government will clarify that the CGT exemption for wasting assets only applies if the person selling the asset has used it in their own business. These changes have effect from 1 April 2015 for Corporation Tax on chargeable gains, and 6 April 2015 for CGT.
19 Corporation Tax rate
The government will legislate to set the rate of Corporation Tax at 20% for the financial year beginning on 1 April 2016.
20 Corporation Tax: restricting relief for goodwill
As announced at Autumn Statement 2014, the government will restrict the Corporation Tax relief a company may obtain for the acquisition of the reputation and customer relationships associated with a business (‘goodwill’), including customer information, when the business is acquired from a related individual or partnership. This will affect acquisitions on or after 3 December 2014.
21 Research & Development (R&D) tax credits: rates
As announced at Autumn Statement 2014, the government will increase the rate of the above the line credit from 10% to 11% and will increase the rate of the SME scheme from 225% to 230%, from 1 April 2015.
22 R&D tax credits: access
Following a consultation on improving access to R&D tax credits for smaller companies, the
government will introduce voluntary advanced assurances lasting 3 years for smaller businesses making a first claim from autumn 2015 and reduce the time taken to process a claim from 2016. The government will produce new standalone guidance aimed specifically at smaller companies, backed by a 2-year publicity strategy to raise awareness of R&D tax credits. HMRC will publish a document in the summer setting out a roadmap for further improvements to the scheme over the next 2 years.
23 Repeal of the late paid interest rules
As part of the review of the legislation on corporate debt announced at Budget 2013, the government will repeal rules concerning loans made to UK companies by a connected company in a non-qualifying territory.
24 VAT registration and deregistration thresholds
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.
25 Deductible VAT relating to foreign branches
The government will no longer allow businesses to take account of foreign branches when calculating how much VAT on overhead costs they can reclaim in the United Kingdom. This measure will affect partly exempt businesses and they will have to implement the change from the beginning of their next partial exemption tax year falling on or after 1 August 2015.
26 Company Car Tax rates for 2019-20
The appropriate percentage of list price subject to tax will increase by 3 percentage points for cars emitting more than 75 grams of carbon dioxide per kilometre (gCO2/km), to a maximum of 37%, in 2019-20. There will be a 3 percentage point differential between the 0-50 and 51-75 gCO2/km bands and between the 51- 75 and 76-94 gCO2/km bands.
27 Company Car Tax rates for 2017-18 and 2018-19
As announced at Budget 2014, the appropriate percentage of list price subject to tax will increase by 2 percentage points for cars emitting more than 75 gCO2/km, to a maximum of 37%, in both 2017-18 and 2018-19. In 2017-18 there will be a 4 percentage point differential between the 0-50 and 51-75 gCO2/ km bands and between the 51-75 and 76-94 gCO2/km bands. In 2018-19 this differential will reduce to 3 percentage points.
28 Fuel Benefit Charge
From 6 April 2016 the Fuel Benefit Charge multiplier for both cars and vans will increase by RPI.
29 Van Benefit Charge
From 6 April 2016 the main Van Benefit Charge (VBC) will increase by RPI. As announced at Budget 2014, the government will extend VBC support for zero emission vans to 5 April 2020 on a tapered basis.
30 Making tax easier: the end of the tax return
The government will transform the tax system over the next Parliament by introducing digital tax accounts to remove the need for individuals and small businesses to do annual tax returns. Further details on the policy and administrative changes needed to deliver this will be published later in 2015.
31 Making tax easier: new payments process
The government will consult over the summer on a new payment process to enable tax and NICs to be collected through digital accounts, instead of self-assessment.
32 Simplification of employee benefits and expenses
As announced at Autumn Statement 2014, the government will simplify the administration of employee benefits and expenses. From April 2015 the government will provide a statutory exemption for trivial benefits in kind costing less than £50. Following technical consultation, an annual cap of £300 will also be introduced for office holders of close companies and employees who are family members of those office holders. From April 2016, the government will remove the £8,500 threshold below which employees do not pay Income Tax on certain benefits in kind and replace it with new exemptions for carers and for ministers of religion. It will also exempt certain reimbursed expenses and introduce a statutory framework for voluntary payrolling. The new exemption for reimbursed expenses will not be available if used in conjunction with salary sacrifice.
33 Simplified expenses: legislative amendments
The government will amend the simplified expenses regime introduced in Finance Act 2013 to ensure that partnerships can fully access the provisions in respect of the use of a home and where business premises are also a home.
34 Government response to the OTS review of tax penalties
In response to the OTS review of tax penalties, the government is consulting about changing the way in which penalties are applied. The current consultation will close on 11 May 2015.
35 Review of loan relationships and derivative contracts legislation
Following the review announced at Budget 2013, the government will make wide-ranging changes to update, simplify and rationalise the legislation on corporate debt and derivative contracts. These will include a clearer and stronger link between commercial accounting profits and taxation, basing taxable amounts on items of accounting profit or loss. It will also include introduction of a new relief for companies in financial distress and new rules to protect the regime against tax avoidance.
36 Simplifying the ATED administrative burden
As announced at Autumn Statement 2014, the government will introduce changes to the filing
obligations and information requirements with respect to properties within the ATED that are eligible for a relief. These changes will take effect from 1 April 2015.
37 Closing the Liechtenstein Disclosure Facility early
In advance of a new disclosure opportunity, the existing Liechtenstein Disclosure Facility will close at the end of 2015, instead of April 2016
38 Closing the Crown Dependencies Disclosure Facilities early
In advance of a new disclosure opportunity, the existing Crown Dependencies Disclosure Facilities will close at the end of 2015, instead of September 2016.
39 Serial Avoiders
The government will introduce legislation for tougher measures for those who persistently enter into tax avoidance schemes which fail (serial avoiders), including a special reporting requirement and a surcharge on those whose latest tax return is inaccurate as a result of a further failed avoidance scheme. The government will also look to restrict access to reliefs for the minority who have a record of trying to abuse them through avoidance schemes that don’t work and intends to develop further measures to name those who continue to use schemes that fail. Legislation will be introduced in due course that will widen the current scope of the Promoters of Tax Avoidance Schemes regime by bringing in promoters whose schemes regularly fail.
40 Capital Allowances
As announced on 26 February 2015, the government will introduce legislation, with effect from
26 February 2015, to clarify the effect of capital allowances anti-avoidance rules where there are transactions between connected parties or sale and leaseback transaction.
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