Summer Budget 2015

Chancellor George Osborne delivered the first fully Conservative Budget since 1996 earlier today.  How will the measures affect you or your business?

Summary for Business

Below is our summary of the main business announcements:

Corporation Tax

  • There will be tax rate cut from 20% to 19% in 2017.
  • A further reduction to 18% in 2020.
  • The payment dates of companies with a profit in excess of £20 million will be brought forward so that payments are made closer to the point of profit.

Investment in Plant and Machinery

  • Tax relief on up to £200,000 worth of qualifying investment in plant and machinery made on or after 1 January 2016.

Dividend Tax Changes

  • The dividend tax credit will be removed and replaced with a tax-free dividend allowance of £5,000 a pear.
  • Dividend tax rates will be set at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for the additional rate taxpayers.

Savings for Employers

  • The Annual Employment Allowance will rise from £2,000 to £3,000 from April 2016.  Firms employing up to 4 full time workers full time on the National Living Wage will not pay any National Insurance Contributions.

National Living Wage

  • From 2016, a new compulsory Living Wage of £7.20 for over 25s will be introduced.
  • The Living Wage is expected to increase to £9 by 2020.

Apprenticeships

  • An ‘Apprenticeship Levy’ will be introduced on large companies which will provide these companies with funding for training.

Summary for Individuals

Below is our summary of the main measures affecting personal finances:

Personal Tax

  • The tax free Personal Allowance will rise from £10,600 to £11,000 next year. (That is the equivalent of £211.53 income per week tax free).
  • The higher rate threshold will rise from £42,385 to £43,000 next year.
  • The £325,000 Inheritance Tax nil rate threshold will be fixed until 2020/2021.

Childcare

  • Working parents of 3 to 4 year olds will receive up to 30 hours of free childcare a week from September 2017.

Property Tax

  • Mortgage interest rate relief for landlords will be restricted to the basic rate of Income Tax.  This will be phased over 4 years starting in April 2017.
  • Rent-a-Room relief will rise to £7,500 next year.
  • A £175,000 transferable Inheritance Tax allowance will be introduced for residential properties worth under £2 million from 2017.

Pensions

  • Pension tax relief for additional rate taxpayers will be tapered to a minimum of £10,000 from 2016.
  • The Government will begin discussions into proposals to tax pensions in the same way as ISAs.

Duties

  • New Vehicle Excise Duty bands will be introduced from 2017 for brand new cars.
  • The freeze on fuel duty will be maintained.

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