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Summer Budget 2015: the round-up

Lindsay Brown, 15 Jul 2015


 

Summer Budget 2015: the round-up

It’s been a week since the Chancellor delivered his first Budget of the new Conservative government. What were the key announcements?

  • Dividend tax credit

This will be abolished from April 2016 and there will be a new dividend tax allowance of £5,000 a year. The new rates of tax on dividends will be 7.5% for basic rate tax payers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

 

  • Wear and tear allowance

For private landlords, this allowance will be replaced by allowing the actual costs of replacing furnishings. Tax relief for the finance costs of individual landlords will be restricted to basic rate tax and will be phased in over four years from April 2017. The rent a room relief of £4,250 will rise to £7,500 from April 2016.

 

  • The NIC employment allowance

The allowance is currently £2,000 and will rise to £3,000 from April 2016. Companies where the director is sole employee will be no longer be able to claim this allowance.

 

  • Non-domiciled individuals

Non-UK domiciled individuals who have been resident in the UK for at least 15 of the last 20 years will be treated as UK domiciled for tax, including inheritance tax from April 2017.

 

  • Pension tax relief reform?

The government will consult on radical reform of the system of tax relief for pensions. The introduction of the secondary market in pension annuities has been postponed until 2017.

 

  • Inheritance tax

There will be an extra inheritance tax nil rate band for residences passed on death to descendants, starting at £100,000 in 2017-18 and rising to £175,000 in 2020-21. It will be transferable to surviving spouses and will apply to equivalent amounts where an individual has down-sized on or after 8 July. The extra nil rate band will be frozen at £325,000 until 2021.

 

  • Corporation tax

The corporation tax rates will be reduced from 20% to 19% in the financial year 2017, and 18% in 2020.

 

  • The annual investment allowance

The allowance is currently £500,000 and will be reduced to £200,000 from 1 January 2016. The corporation tax relief that companies can obtain for the cost of goodwill will be restricted on all deals with effect on or after 8 July.

 

 

  • Insurance premium tax

The tax is going to increase from 6% to 9.5% from 1 November 2015.

 

  • Welfare reforms

The Chancellor announced a range of reforms to restrict many social security benefits to working age people.

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Lindsay Brown

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