Thursday, 19 March 2015

UK Budget 2015 Headlines

This pre-Election Budget has thrown up a few surprises and a few "give-aways":

·       Annual personal tax returns are to be replaced by new digital tax accounts (projected to be within five years)

·       Decrease in the lifetime pension allowance - now down to £1million but it will be indexed in line with inflation from 6 April 2016

·       FATCA-type reporting is to be introduced from 2016 to assist in the fight against tax evasion. Financial institutions with account holders tax resident in countries with which the UK has a Exchange of Information Agreement will be required to collect and report information on a wide range of financial investments and accounts

·       The VAT threshold has been increased from 1 April 2015 to £82,000

·       The first tranche  of interest income - £1,000 for basic rate taxpayers & £500 for higher rate taxpayers -  will be tax exempt.  Additional rate (45%) taxpayers will get no tax exempt allowance whatsoever!

·       Personal allowances will rise to £10,600 in 2015/16, £10,800 in 2016/17 and then to £11,000 in 2017/18

·       The basic rate band will be increased, reversing the trend in recent years, and will be £31,785 in 2015/16, £31,900 in 2016/17 and £32,300 in 2017/18

·       Class 2 National Insurance Contributions are to be abolished but no date has been set for the implementation of this measure.  Class 4 National Insurance Contributions are to be reformed

·       A new ISA account (Help To Buy ISA) is to be launched to help first-time buyers with the Government matching savings on the basis of £50 for every £200 saved by the individual with an overall limit of £3,000 and owners of existing ISAs will find they can make withdrawals and replacements without losing the ISA status

·       From April 2016, tax relief for travel and  subsistence expenses is to be restricted for individuals working through intermediaries eg umbella companies

·       The Remittance Basis Charge is to be extended such that non-domiciled individuals resident in the UK for 17 out of 20 years will be required to pay £90,000 to access the remittance basis of taxation from this April.  The charge for those resident in the UK for 12 of the last 14 years will rise to £60,000

·       A consultation process will be opened for comment on the Government's intention to restrict the availability of Deeds of Variation for Inheritance Tax planning purposes