2015 Budget Summary
Wednesday was Budget Day so it’s time for our 2015 Budget Summary!
With 50 days to the general election it was always going to be about pacifying and attracting the voters with statements of higher employment and living standards and the deficit being under control. We’ll let you judge how much of what was said was propaganda and cut to the points we think will affect you:
Changes for Businesses
- Tax rates for large companies are coming down: Corporation Tax was already known to be cut to 20% across the board from 1 April 2015;
- Employment costs are falling: National insurance for under 21’s has been abolished from April 2015, apprentices will follow in April 2016;
- Business rates are being reviewed: relief has been enhanced and the government has heeded the advice of many (see our blog on Business Rates) and agreed to a review and potential reform;
- More positive news for investors in plant and equipment: Annual Investment Allowances on plant and equipment purchases were set to drop to £25,000 at the end of the year, from £250,000 currently. The chancellor has stated that they won’t drop as low as that but is uncommitted to what level they will be. They’ll be reviewed again in the Autumn statement;
- Good news for self-employed farmers: profits for income tax purposes can be averaged over 5 years, extended from 2, more details of that are still to be announced.
Changes for Individuals
- More tax free income: the personal allowance is increased to £10,600 for 2015/16 and £10,800 for 2016/17 reaching £11,000 for 2017/16;
- Less people paying higher rate tax: the starting level for 40% tax will be £42,385 for 2015/16;
- Tax free savings income for all: £1,000 for basic rate tax payers and £500 for higher rate payers, but not until April 2016;
- More good news for low earners: minimum wage increases were announced earlier in the week and reflected on today, alongside apprentice wage rates;
- Changes for the self-employed: Class 2 National insurance, currently paid at a fixed rate per week, will be abolished during the next parliament;
- The end of the tax return? The digital age is being embraced and the government are “Making Tax Easier” with timings and details of an online “user friendly” tax system to follow;
- Transferable allowance increase: applying to couples where one is a basic rate tax payer and the other earns less that the personal allowance, the lower earner can elect to transfer up to £1,100 to their spouse from 6 April 2015;
- Pension allowances are changing again: while the annual allowance remains unchanged the lifetime allowance has been cut from £1.25m to £1m but from April 2016;
- Bad news for non-residents property owners: as of 6 April 2015 capital gains tax will be payable on disposals although not on the whole gain – we’ll be blogging on this in more detail soon so check back here in a few weeks;
On a lighter note…
- Duty on beer has been cut by 1p and on cider and spirits by 2%;
- The Fuel duty rise scheduled for September has been cancelled;
- And there’s to be a new £1 coin in 2017, designed by a 15 year old.
This is only a synopsis of what was announced yesterday and what is coming into effect next month. You can download our full 2015 Budget Summary from our resources page.
Our app is already updated with the very latest rates and allowances. Why not download it for an in hand reference source and other useful tools. Calculators will be updated from 6 April 2015.
If you have any questions about the budget and how they might affect you then get in touch.