Budget March 2015- Highlights
The Chancellor delivered his final budget statement of this parliament.
Here are some of the key points from the budget that will affect you as a small business owner or personal tax payer.
Personal allowance for 2015/16 will rise from £10,000 to £10,600 and there will be an £80 reduction in the basic rate band to £31,785, as previously announced. The personal allowance will be increased to £10,800 in 2016/17 and £11,000 in the following year. The basic rate limit will be increased to £31,900 for 2016/14 and £32,300 for 2017/18.
Higher Rate Threshold will rise to £42.700 in 2016/17 and £43,300 in 2017/18, the first above-inflation increases in the threshold for seven years.
The government proposes to abolish self-employed Class 2 national insurance contributions sometime in the next parliament.
Pensions lifetime allowance - There will be a cut in the pension lifetime allowance to £1 million from April 2016, together with another set of transitional protection rules.
Help to Buy ISA - A new help to buy ISA will be introduced with the government providing a £50 bonus for every £200 of monthly savings up to a maximum of £3,000 on £12,000 of savings. The aim is to start the scheme from autumn 2015. The bonus will be available for purchases of homes of up to £450,000 in London and up to £250,000 elsewhere.
VAT thresholds: The VAT registration threshold will rise from £81,000 to £82,000 and the deregistration threshold will increase from £79,000 to £80,000. Both changes take effect from 1 April 2015.
Tax-free childcare: The maximum amount that parents of disabled children will be able to receive under the new childcare scheme starting in the autumn will be increased from £2,000 to £4,000 a year for each disabled child.
Company car benefit: From 2019/20 the scale percentage of the list price of company cars that are subject to tax will be increased by 3% up to a maximum of 37% for cars emitting more than 75g/km of CO2.There will be a 3% differential between the 51-57g/km and 76-94g/km bands. The rates for years up to 2018/19 are as previously announced.
Van benefit charge (VBC): From 6 April 2016 the main VBC will increase in line with RPI. As previously announced, lower rates of VBC for zero emission vans will be extended to 5 April 2020 on a tapered basis.
Fuel benefit charge: From 6 April 2016 the fuel benefit charge multiplier for both cars and vans will increase in line with RPI.
Tax returns and tax payment: During the next parliament, digital tax accounts will be introduced to remove the need for individuals and small businesses to complete annual tax returns. Further details about the policy and administrative changes will be published later in 2015. Over the summer there will also be consultation on a new payment process to enable tax and NICs to be collected via digital accounts.
Corporation tax rate: The main rate of corporation tax will be 20% from 1 April 2015, as previously announced, and will stay at 20% for the financial year starting on 1 April 2016.
Annual investment allowance: The temporary £500,000 annual investment allowance comes to an end on 31 December 2015. The Chancellor said that a reduction to £25,000 from 1 January 2016 “would not be remotely acceptable” and it would be set “at a much more generous rate” in the autumn statement 2015.
Research and development (R&D) tax credits: The above-the-line R&D credit will rise from 10% to 11% and the rate of relief for SME scheme will rise from 225% to 230%. Qualifying expenditure for R&D tax credits will be restricted so that the costs of materials incorporated in products that are sold are not eligible for the relief. These measures were announced in the autumn statement 2014 and will take effect from 1 April 2015.
Goodwill: Corporation tax relief will be restricted on goodwill associated with a business that a company acquires from a related individual or partnership from 3 December 2014, as announced in the autumn statement 2014.
If there are any areas that you would like to discuss in more details, or would like to see how these may impact your business or personal finances please feel free to give me a call on 01257 255521.