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March 2015 Budget Highlights

Budget Growth

The Chancellor’s 2015 March Budget was clearly aimed at winning the votes of savers and pensioners in the May General Election. The key points are highlighted in this post.

Personal Allowances

  • Confirmation that the basic personal allowance for 2015/16 will be £10,600.
  • Above inflation increase to £10,800 for 2016/17 and £11,000 in 2017/18.
  • Those aged 75 and over will continue to receive a personal allowance of £10,660 for 2015/16 and by 2016/17 they will receive the basic personal allowance.
  • If your adjusted net income exceeds £100,000, the personal allowance is reduced by £1 for every £2 over £100,000 giving an effective rate of 60% on income between £100,000 and £121,200 for 2015/16.

Income Tax Bands

  • 20% basic rate band is £31,785 for 2015/16 increasing to £31,900 for 2016/17.
  • It is proposed that the higher rate tax threshold will increase to £43,300 for 2017/18.
  • The 45% top rate continues to apply to taxable income over £150,000 for 2015/16.

Further Changes To ISAs

  • The current £15,000 ISA limit is increased to £15,240 from 6 April 2015.
  • The Junior ISA limit increases to £4,080 from 6 April 2015.
  • In the 2015/16 tax year individuals will be able to take money out of their ISA and put it back in within the same year, without losing their ISA tax benefits as long as the repayment is made in the same financial year as the withdrawal.

Further Pension Flexibility

  • From 6 April 2016, Government plans to bring in new legislation to allow people who are already receiving income from an annuity to agree with their provider to assign their annuity income to a third party in exchange for a lump sum or an alternative retirement product.
  • Current 55% charge to be abolished.

Pension Fund Lifetime Allowance Reduced

  • From 6 April 2016 the pension fund lifetime allowance will be reduced from £1.25million to £1million.
  • The lifetime allowance will then be indexed annually in line with CPI from 6 April 2018.

Capital Taxes

  • It had already been announced that the CGT annual exempt amount would increase to £11,100 for 2015/16. With a top CGT rate of 28% this allowance potentially saves £3,108 a year, or £6,216 for a married couple.

Further Restrictions To CGT Entrepreneur's Relief

  • It has now been announced that from 18 March 2015 CGT entrepreneurs’ relief will be restricted on certain “associated disposals”.
  • The 10% CGT rate will no longer be available on the disposal of personal assets used in a business carried on by a company or a partnership unless they are disposed of in connection with a disposal of at least a 5% shareholding in the company or a 5% share in the partnership assets.

Tax Relief On Small Donations

  • From 6 April 2016 the maximum annual donation amount which can be claimed through GASDS (Gift Aid Small Donation Scheme) will be increased from £5,000 to £8,000 allowing charities and Community Amateur Sports Clubs to claim Gift Aid style top-up payments of up to £2,000 a year.

Corporation Tax Rate

  • A single corporation tax rate of 20% will apply from 1 April 2015 whatever the level of your company’s profits.

Annual Investment Allowance

  • The Annual Investment Allowance (AIA) which provides a 100% tax write off for the cost of most plant and machinery (exception motor cars) increased to £500,000 per annum for expenditure between 1 April 2014 to 31 December 2015, was due to fall to £25,000 from 1 January 2016, but a new limit has been delayed until later this year.

Research And Development Tax Credit

  • Increase in corporation tax reduction to 230% from the 1 April 2015 for SME's carrying out qualifying research and development.

VAT Registration Limit

  • Increased by £1000 to £82,000 from 1 April 2014.
  • The de-registration limit increased by £1000 to £80,000.

Tax Returns

  • The Government proposes to transform the tax system over the next Parliament by introducing online tax accounts to remove the need for individuals and small businesses to complete annual tax returns.
  • Taxpayers will still need to provide any details HMRC does not have and will be responsible for checking that the information is correct.

Tax Diary Of Main Events

1st April - Corporation tax for year to 30/6/14

6th April - 2015/16 Tax year begins

19th April - Final RTI FPS due by this date. Indicate that this is Final Submission for the Tax Year but note that the end of employer questionaire is not included this year.

1st May - Corporation tax for year to 31/7/14

19th May - PAYE and NIC deductions, and CIS return and tax month to 5/5/15

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