2015 budget overview

2015 budget overview
The Budget delivered on 18 March 2015, despite pre-election speculation, was a “steady as she goes” announcement to support continued and measured economic growth.

This is our summary of the tax horizon following the Budget.

BUSINESS TAXES


Corporation Tax: as previously announced from 1 April 2015, the main rate of corporation tax will be reduced to 20% so the rate will be the same for all companies whatever their taxable profits. 

Capital allowances: the rates and thresholds of the main capital allowances from April 2015 are an 18% writing-down allowances and the 100% Annual Investment Allowance limit is £500,000 until 31 December 2015, thereafter it will reduce to £25,000 although it is hoped this will be relaxed by the Autumn Statement. 

Employment allowance: as in 2014/15 from 6 April 2015, some employers will be able to offset up to £2,000 each tax year against Class 1 NI contributions.

Research and development: for SME’s the relief available increases from 225% to 230% from 1 April 2015.   

PERSONAL TAXES

Income tax: the personal allowance increases to £10,600 from 6 April 2015 and the basic rate tax band reduces to £31,785. The additional rate of tax chargeable on income over £150,000 remains at 45% for 2015/16 tax year. Budget 2015 has announced that, for 2016/17, the personal allowance will be increased to £10,800 and the basic rate limit increased to £31,900. 

From April 2016 there will also be a new exemption for the first £1,000 of savings income (or £500 for higher rate tax payers) that should mean that 95% of the population will no longer pay any income tax on their savings income.

National insurance: from 6 April 2015 the employee’s national insurance rate is 12% below the upper earnings limit and 2% above that, the rate of employer’s national insurance contributions is 13.8%.

Inheritance tax: as previously announced the £325,000 threshold for the nil-rate band is frozen until 2017/18. 

Capital Gains Tax: the annual exemption for 2015/16 is increased to £11,100. 

Entrepreneurs Relief (ER): from 6 April 2015, the lifetime limit of gains which can benefit from ER remains at £10m.

Individual Savings Accounts: Budget 2015 announced further flexibility and the Help to Buy ISA to help those saving to buy their first home. The ISA annual limit is £15,240 for 2015/16.

Childcare scheme: the Government had previously announced the extension of tax relief to employees and the self employed too, up to a maximum of £2,000 each year. The new system will start from autumn 2015. 

Pensions: Budget 2015 announced that from April 2016 those receiving an annuity will then have the option to sell and enjoy the same flexibility that applies to defined contribution pension arrangements from April 2015.

VAT

Registration and de-registration thresholds: whilst the VAT rates remain unchanged the registration threshold will increase to £82,000 and the de-registration threshold to £80,000; both changes apply from 1 April 2015.
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