Summer Budget 2015 - Full Summary
The Chancellor George Osborne delivered the first Budget of the new Parliament this afternoon: the first by a Conservative Government since 1996.
It had been promised the Budget would reward work over welfare and while the expected welfare reforms were unveiled, the main headlines are expected to be taken by the ‘national living wage’ introduced to lift the minimum wage from next year.
Billed by the Chancellor at the outset as a “big budget for a country with big ambitions”, it included a number of changes to the taxation system. These measures included some of the promises made in the pre-election Conservative manifesto on inheritance tax, pensions and raising income tax thresholds, together with some not wholly unexpected changes, such as permanent non-dom status being abolished from April 2017 and some surprise announcements.
The replacement of the dividend credit with a tax-free dividend allowance and higher tax rates on dividends will increase the tax cost of extracting profits from companies for many business owners and investors. Buy-to-let investors will also be disappointed with tax relief on mortgage interest being gradually reduced to the basic rate.
As expected, the inheritance tax exemption was raised to £500,000 for individuals and £1 million for couples where they pass on their home to their descendants. This is funded by the annual allowance on pension contributions being tapered down to £10,000 for those earning between £150,000 and £210,000.
For companies, the reduction in the corporation tax rate to 18% by 2020 will be welcomed, but the restriction on the deductibility of goodwill purchased from today will disappoint some.
With the Government looking to raise a further £5billion from tax evasion, avoidance and aggressive tax planning, a number of anti-avoidance measures were introduced.
The Finance Bill, which will give effect to many of the announced measures, will be published on Wednesday 15 July 2015. Royal Assent is not expected until the autumn.
Nick Jordan, Tax Partner
T 020 7969 5585