With the Autumn Statement coming out this past Wednesday, I thought this would be a great time to summarize the different taxes changes that will affect you.
- Personal Tax Allowances 2015-2016
From 6 April 2015 the Income Tax personal allowance will increase from £10,000 to £10,600.This essentially means that you will be £120 better off. The basic rate limit will be £31,785 so the higher rate threshold above which individuals pay Income Tax at 40% will be increased to £42,385.
- National Insurance Contributions – Employer contributions
From April 2016 employer National Insurance Contributions up to the upper earnings limit for apprentices aged under 25 will be abolished.
- National Insurance Contributions – Employment Allowance
From April 2015 the £2,000 annual Employment Allowance for employer National Insurance Contributions will be extended to care and support workers.
- Individual Savings Accounts (ISAs) – Transfer to spouses on death
The Government will introduce legislation to allow an additional ISA allowance for spouses or civil partners when an ISA saver dies, equal to the value of that saver’s ISAs.
- Inheritance Tax (IHT) – Exemption for medals and other awards
The existing IHT exemption for medals and other decorations that are awarded for courage or bravery will be extended. From 3 December 2014 it will apply to all decorations and medals awarded to the armed services or emergency services personnel, and to awards made by the Crown for achievements and service in public life.
- Stamp Duty Land Tax (SDLT)
SDLT on purchases of residential property is being reformed with effect from on or after 4 December 2014. SDLT will now be payable at each rate on the portion of the purchase price which falls within each band as opposed to a single rate on the whole transaction value. The rates and thresholds are also being amended as part of this reform.
The portion of the transaction value up to £125,000 is charged at a rate of 0%, the portion of the transaction value between £125,001 and £250,000 is charged at a rate of 2%, the portion between £250,001 and £925,000 is charged at a rate of 5%, the portion between £925,001 and £1,500,000 is charged at a rate of 10% and the portion over £1,500,001 is charge at a rate of 12%.
- Annual Tax on Enveloped Dwellings (ATED)
The annual charges on the ATED will increase by 50% above the inflation rate for residential properties worth more than £2million for the chargeable period 1 April 2015 to 31 March 2016.
- Air Passenger Duty (APD)
From 1 May 2015 children under 12 will be exempt from paying APD. Children under 16 will become exempt from 1 March 2016.
- Tobacco levy
The Government will consult on the introduction of a levy on tobacco manufacturers and importers. A consultation document will be published shortly. As a result of this consultation, prices of tobacco products such as cigarettes will increase.
- Tax credits – Stopping overpayments
Building on the announcement made at Autumn Statement 2013, from April 2015 tax credit payments will be reduced in-year where, due to a change of circumstance, a claimant would otherwise receive an overpayment. This will prevent claimants building up unnecessary overpayments that must be repaid at a later stage.
Anti Avoidance and Fairness
- Capital Gains Tax – Restricting Entrepreneurs’ Relief (ER): restricting unfair tax advantages on incorporation
The Government will prevent individuals from claiming Entrepreneurs’ Relief on disposals of the reputation and customer relationships associated with a business (‘goodwill’) when they transfer the business to a related close company. This will affect transfers on or after 3 December 2014.
- Capital Gains Tax – Entrepreneurs’ Relief
The Government will allow gains which are eligible for Entrepreneurs’ Relief, but which are instead deferred into investments which qualify for the Enterprise Investment Scheme (EIS) or Social Investment Tax Relief (SITR), to remain eligible for ER when the gain is realised. This will benefit qualifying gains on disposals that would be eligible for ER but are deferred into EIS or SITR on or after 3 December 2014.
- Income tax – Miscellaneous loss relief
Legislation will be introduced to counter avoidance of income tax involving losses from miscellaneous transactions. Legislation denying loss relief where a miscellaneous loss, or miscellaneous income, arises from relevant tax avoidance arrangements will have effect from 3 December 2014. Legislation will also be introduced with effect from tax year 2015–16 to limit relief to miscellaneous income of the same type as the loss.