Budget 2015 – How Will It Affect You?

The main tax headlines from George Osborne’s pre-election Budget are:

  • Income Tax personal allowance to be increased from £10,000 to £10,600 (2015/16), £10,800 (2016/17) and £11,000 (2017/18)
  • Higher rate tax threshold to be increased from £41,865 to £42,385 (2015/16), £42,700 (2016/17) and £43,300 (2017/18)
  • New Personal Savings Allowance to be introduced on 6 April 2016 which will exempt up to £1,000 of annual interest from savings tax (£500 for higher rate taxpayers)
  • Flexible ISAs which allow monies to be withdrawn and paid back in the same tax year, without losing the tax exempt status
  • From Autumn 2015, Help to Buy ISAs whereby first-time buyers will obtain tax relief on the monies used to purchase their first home
  • From April 2016, farmers averaging relief to be extended from 2 years to 5 years
  • Future streamlining of the Self Assessment tax system for both individuals and companies, with a move towards better use of digital technology
  • The £500K Capital Allowances Annual Investment Allowance (AIA) to be reduced on 31 December 2015, but the new figure to be announced at a later date
  • Lifetime Allowance for pensions to be significantly reduced from £1.25 million to £1 million from 6 April 2016 (Annual Allowance to remain at £40K)
  • Pensioners will be able to “cash in” annuities from 6 April 2016
  • Minor changes to CGT entrepreneurs relief
  • Consultation on the possible removal of Deeds of Variation which are often used by families to correct inefficient wills
  • VAT registration threshold to be increased from £81K to £82K
  • Future changes to NIC for the self employed
  • Duties – beer (reduction of 1 pence per pint); wine (no change); cider (reduction of 2%); spirits (reduction of 2%); fuel (no change)
  • Several new tax anti-avoidance measures

Overview – A budget for savers (and votes?)

Today’s Budget was understandably a very political one, given the forthcoming general election.  George Osborne focussed a great deal on economic statistics, emphasising the significant improvement from when he first took office 5 years ago.  From a tax viewpoint, the Budget was a relatively quiet affair, which is perhaps to be expected given the constraints of a coalition partner.  The 11 million pensioner votes may ultimately be the deciding factor in May’s election and this important fact has not been overlooked by the Chancellor.  The ability to access pensions and the introduction of pensioner bonds in the last Budget has now been followed up today with the announcement of a new Personal Savings Allowance, flexible ISAs and the ability to cash-in annuities.  The business community will also largely welcome today’s Budget, as there was a continuing theme of consistency and stability.  Now that the Budget is out of the way, we can fully expect the “gloves to be off” and it will be interesting to see what tax changes the major political parties propose in their forthcoming manifestos!

Please click here to download a copy of our 2015/16 Tax Tables.

Please click here if you would prefer to read and download our Budget 2015 highlights as a pdf.

Click on the headings below to read further information on the affects of today’s announcements:

If you have any queries on the 2015 Budget please do not hesitate to contact one of our tax specialists on 01228 530913 or 01768 864466.

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