Name: Aileen Scott
Company: Campbell Dallas
Aileen Scott is a partner at Campbell Dallas, Charterted Accountants. Email Aileen with your financial queries and she will answer in following issues of BWS magazine. e: firstname.lastname@example.org
George Osborne presented the final Budget of this parliament on 18 March 2015. In his speech the chancellor reported ‘on a Britain that is growing, creating jobs and paying its way’.
Due to the dissolution of Parliament on 30 March some measures will be legislated for in the week commencing 23 March, whilst others will be enacted by a Finance Bill in the next Parliament (depending on the result of the General Election).
A summary of the main proposals from the budget 2015 are outlined below.
The personal allowance for 2015/16
For those born after 5 April 1938 the personal allowance will be increased to £10,600. The basic rate band will decrease from £31,865 to £31,785 so that the threshold at which the higher band applies will rise from £41,865 to £42,385 for those who are entitled to the full basic personal allowance.
Corporation tax rates
From 1 April 2015 the main rate of corporation tax, currently 21%, will be reduced to 20%. As the small profits rate is already 20%, the need for this separate code of taxation disappears.
Class 2 National Insurance contributions (NIC)
From 6 April 2015 liability to pay Class 2 NIC will arise at the end of each year. Currently a liability to Class 2 NIC arises on a weekly basis. It will therefore be paid alongside their income tax and Class 4 NIC. For those who wish to spread the cost of their Class 2 NIC, HMRC will retain a facility for them to make regular payments throughout the year. The current six monthly billing system will cease from 6 April 2015.
Those with profits below a threshold will no longer have to apply in advance for an exception from paying Class 2 NIC. Instead they will have the option to pay Class 2 NIC voluntarily at the end of the year so that they may protect their benefit rights.
Employer provided cars
From 6 April 2015 the percentage applied by each band goes up by 2% and the maximum charge is increased to 37%. From 6 April 2016 there will be a further 2% increase in the percentage applied by each band. The 3% diesel supplement will be removed from 6 April 2016.
Review of employee benefits
The Government has issued draft legislation on four areas:
- From 6 April 2015 there will be a statutory exemption for certain non-cash benefits in kind costing up to £50. An annual cap of £300 will be introduced for office holders of “close companies” and employees who are family members of those office holders.
- From 6 April 2016 the £8,500 threshold below which employees do not pay income tax on certain benefits in kind will be removed.
- From 6 April 2016 there will be no tax liability on an employee for certain reimbursed expenses.
- HMRC will be able to issue Regulations to allow employers to include taxable benefits in pay and thus account for PAYE on the benefits. Employers will therefore not have to include these items on forms P11D.
Capital Gains Tax – Restricting Entrepreneurs’ Relief (ER)
ER will not be available to reduce Capital Gains Tax on gains which accrue on personally owned assets used in a trading 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.
This measure will affect disposals on and after 18 March 2015. To obtain ER on a personally owned asset used in a trading company or partnership there has to be a genuine withdrawal from participation in the company or partnership.
A detailed review of the budget with commentary from our tax specialists can be found on the Campbell Dallas website. If you have any questions about how the budget may affect you – get in touch with Aileen at email@example.com