Summer 2015 BudgetJul. 9, 2015, 9:52am
Gorgeous George’s Sexy Summer 2015 Budget!
Yesterday Chancellor George Osborne delivered his seventh Budget and the first from a wholly Conservative government since November 1996.
Was the budget ‘sexy’, arguably not. Is George ‘Gorgeous’, well that is not for us to say! Somewhat shamelessly of us though, it did make you click through to read this – we will say no more!
In previous Budgets and Autumn Statements, the chancellor had outlined plans for the coming years including:
A tax-free personal savings allowance to apply to the first £1,000 of interest earned on savings for basic rate taxpayers, and the first £500 for higher rate taxpayers from April 2016
The amount that can be saved in a pension free of tax over the course of a lifetime will fall from £1.25m to £1m from April 2016
However, there were still a couple of budget changes that we did not see coming. Some of the pertinent business and taxation points are summarised below:
- Higher rate income tax threshold to rise from £42,385 in 2015/2016 to £43,000 from 2016/2017.
- Tax-free personal allowance for income tax to be raised from £10,600 for 2015/2016 to £11,000 for 2016/2017 and £11,200 in 2017/2018.
- The rates of income tax are to remain unchanged.
- Corporation tax is to be reduced from 20 per cent to 19 per cent in 2017 and to 18 per cent by 2020.
- The level of the Annual Investment Allowance will increase to £200,000 for all qualifying investment in plant and machinery made on or after 1 January 2016 for small and medium-sized businesses.
- The dividend tax credit to be replaced with a new tax-free allowance of £5,000 on dividend income. Rates of dividend tax to be set at 7.5 per cent, 32.5 per cent and 38.1 per cent.
- The NIC Employment Allowance will be increased, from April 2016, from £2,000 to £3,000.
- A National Living Wage is to be introduced for workers aged 25 and above. From April 2016, the NLW will be set at £7.20.
Inheritance tax is currently charged at 40% for estates over the tax-free allowance of £325,000 per person. Married couples and civil partners can pass any unused allowance on to one another.
From April 2017, an additional nil rate band will be introduced that can only be used in connection with the family home so it can pass to children or grandchildren tax-free after death. This will be phased in from 2017-18.
Broadly, the additional nil rate band will be added to the existing £325,000 IHT threshold, meaning the total tax-free allowance for a surviving spouse or civil partner will be up to £1m by 2020-21.
The allowance is tapered for those leaving an estate of more than £2m, and will be reduced by £1 for every £2 over this threshold.
The Chancellor stated that the reduction in inheritance tax would be paid for by the reduction in pension tax relief next year. There are no further details on this at present but a pension reform Green Paper is to be published for consultation, we will let you have further details on as soon as they are available.
Housing & Buy to Let:
- Mortgage interest relief for individual landlords of residential property is to be restricted to the basic rate of income tax, this change is to be phased in over four years from April 2017.
- From April 2016 the Wear and Tear Allowance will be replaced with a new relief that allows all residential landlords to deduct the actual costs of replacing furnishings.
- Tax relief for homeowners who rent out a room is to be increased from £4,250 to £7,500 from next year.
As always if you have any query regarding the budget or if you simply want to discuss whether George is ‘Gorgeous’, then do not hesitate to contact us.