Some main points from the Summer Budget 2015
The personal allowance will increase to £11,000 from 6 April 2016 and to £11,200 from 6 April 2017. Tax at the higher rates will start at £43,000 of income from 6 April 2016 and £43,600 from 6 April 2017. The aim is to reach a personal allowance of £12,500 and a higher rate threshold of £50,000 by the end of this parliament.
From April 2016 dividends will be taxed more heavily, with only the first £5,000 exempt from additional tax. A quick calculation suggests that a 40% taxpayer taking a dividend of £100,000 would pay £7,125 more in tax than at present. It seems likely that it will still be more effective for family companies to pay minimal salaries and top up with dividends but shareholders may wish to take a significant dividend on or before 5 April 2016, even if they immediately lend the money back to the company.
Corporation tax will reduce to 19% from 1 April 2017 and to 18% from 1 April 2020.
From 1 January 2016 full tax relief will be available on purchases of plant and equipment up to £200,000 per annum in total.
Companies will not be able to write off goodwill against corporation tax for business acquisitions on or after 8 July 2015.
Rent-a-Room relief increases from £4,250 to £7,500 per annum from 6 April 2016.
Relief for buy-to-let interest will be gradually reduced to basic rate for higher rate taxpayers over the period from 6 April 2017 to 5 April 2020.
Individuals with income in excess of £150,000 will have their allowance for tax deductible pension contributions reduced on a tapered basis down from £40,000 per annum to a minimum £10,000.
An additional inheritance tax (IHT) relief will be given where a residence is passed on death to a direct relative. This starts at £100,000 on 6 April 2017 and increases to £175,000 by 6 April 2020. It means ultimately that a couple will have a total exemption of £1 million. The additional relief will be indexed after 5 April 2021, but the relief will be gradually withdrawn where the total estate exceeds £2 million.
The remittance basis for non-doms will be removed from 6 April 2017 where they have been UK resident for more than 15 of the past 20 tax years. They will also be subject to IHT on their worldwide assets. Any existing offshore trusts will still be safe unless they hold UK residential property.
The exemption of £2,000 from employer’s national insurance contributions will be increased to £3,000 from 6 April 2016.
