Headlines from the Summer Budget 2015
The Chancellor delivered the first budget of the current Parliament earlier this afternoon.
The key tax measures announced include:
- Personal allowance will increase to £11,000 from April 2016.
- Higher rate threshold will increase to £43,000 from April 2016.
- The dividend tax credit will be abolished from 2016 and replaced with a tax free dividend allowance of £5,000.
- The dividend tax rates will become 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers from April 2016.
- Mortgage interest relief on buy to let properties reduced to the basic rate; this is to be phased in over 4 years, starting from April 2017.
- Rent-a-Room relief increased from £4,250 to £7,500 from April 2016.
- Permanent non-dom status will be abolished from April 2017.
- Anyone who has been resident in the UK for 15 of the last 20 years will be deemed UK-domiciled for all tax purposes.
- Corporation tax rate reduced to 19% in 2017 and 18% in 2020.
- Payments on accounts brought forward where profits over £20m.
- Corporation tax deduction on goodwill to be restricted.
- The Annual Investment Allowance will be set at a permanent level of £200,000 per annum from January 2016.
- Additional £175,000 exemption will be introduced over 4 years from 2017 for individuals who wish to pass on their home to family members who are direct descendants, this will be tapered away for estates worth more than £2m.
- This exemption can be passed to the spouse to create an inheritance tax exemption of £500,000 for individuals and £1m for couples on the family home.
- The existing £325,000 threshold will be fixed until the end of 2020/2021.
- The annual allowance will be reduced for those earning over £150,000, falling to £10k for those earning £210,000 or above.
- The Government will consult on reforming pensions tax relief.
National Insurance Contributions
- NIC employment allowance will increase to £3,000 per annum.
- This allowance will no longer be available where the director is the sole employee.
New Vehicle Excise Duty bands introduced on brand new cars from 2017.
A number of anti-avoidance measures will be introduced. The Government intend to invest £750m in tackling tax evasion, avoidance and aggressive tax planning.
A National Living Wage will be introduced to lift the minimum wage to £7.20 per hour from April 2016 rising to over £9.00 per hour by 2020.
To read our full summary please click here.
Nick Jordan, Tax Partner
T 020 7969 5585