09 Jul BUDGET 8th JULY 2015 – KEY POINTS
Below are the key points from George Osborne’s 2015 summer budget in relation to businesses and personal tax changes.
Corporation Tax will be cut from its current rate of 20% to 19% in 2017 and 18% in 2020.
National Insurance employment allowance for small firms to be increased by 50% from £2,000 to £3,000 from 2016.
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%, 32.5% and 38.1%.
Annual investment allowance will be fixed permanently at £200,000 from January 2016.
New apprenticeship levy for large employers.
Income tax and Pay
Introduction of a new National Living Wage. From April 2016, a National Living Wage of £7.20 an hour for the over 25s will be introduced. This will rise to over £9 an hour by 2020. This will replace the current National Minimum Wage.
Personal allowance at which people start paying tax will rise from £10,600 to £11,000 in 2016/2017. The government plans to raise the personal allowance to £12,500 by 2020.
The Threshold at which people start paying income tax at the 40p rate to rise from £42,385 in 2015/2016 to £43,000 in 2016/2017.
From April 2017, each individual will be offered a family home allowance so they can pass their home on to their children or grandchildren tax-free after their death. This will be phased in from 2017-18.
The family home allowance will be added to the existing £325,000 Inheritance Tax threshold, meaning the total tax-free allowance for a surviving spouse or civil partner will be up to £1 million in 2020-21.
Tax Reliefs For Buy-To-Let Properties
Mortgage interest relief to be restricted to 20% basic rate of income tax for all individuals by April 2010, currently wealthier landlords receive tax relief at 40% and 45%.
From April 2016, the ‘wear and tear allowance’, which allows landlords to reduce the tax they pay (regardless of whether they replace furnishings in their property) will also be replaced by a new system that only allows them to get tax relief when they replace furnishings.
The amount people can contribute to their pension tax-free to be reduced for individuals with incomes over £150,000.
Most people can contribute up to £40,000 a year to their pension tax-free. From April 2016, this amount will be reduced for individuals with incomes of over £150,000, including pension contributions.
Permanent non-dom status
Permanent non-dom status will be abolished from April 2017. From that date, anyone who’s been resident in the UK for 15 of the past 20 years will be considered UK-domiciled for tax purposes. Currently, UK rules allow non-doms to pay UK tax on their offshore income only when they bring it into the UK.