Budget 2015 Highlights

George Osborne’s sixth and pre-election budget promised no gimmicks or giveaways. For savers there were some gifts but as with many small changes to the tax system the complexities can outweigh the benefits. This afternoon the Gabelle team will work through the details, but meanwhile here are some highlights:

Entrepreneurs’ relief (ER)

Following the changes announced in December further changes were announced today. ER will no longer be available on the disposal of shares in a company that is not a trading company in its own right. This is a direct attack on structures using the joint venture company rules to obtain ER.

ER will also be denied on the disposal of personal assets used in a business carried on by a company or a partnership where the withdrawal from the business is less than 5% of the shareholding in the company, or a 5% share in the partnership assets.

These changes apply from 18 March 2015.

Income tax

From April 2016 self-employed farmers will be able to average their profits for income tax purposes from two years to five years.

Personal allowance

The personal allowance will increase to £10,800 in 2016/17 and £11,000 in 2017/18.

New personal savings allowance 

From April 2016, a tax-free allowance of £1,000 (or £500 for higher rate taxpayers) will be introduced for the interest earned on savings. A basic rate taxpayer with a total income of up to £42,700 a year will be eligible for the £1,000 tax-free savings allowance. A higher rate taxpayer with earnings between £42,701 and £150,000 will be eligible for a £500 tax-free savings allowance.

Corporation tax

Anti-avoidance legislation is introduced with immediate effect to prevent companies from obtaining a tax advantage by entering into arrangements to turn historic tax losses into in-year deductions.

Help to buy ISA

Starting in Autumn 2015 individuals will be able to open an ISA to save up to £200 a month towards their first home, and the government will boost it by 25%. There’s a maximum bonus size of £3,000 per person.

ISA flexibility

In 2015/16 individuals can invest up to £15,240 into an ISA. In future Individuals will be able to take out their money and put it back in within the same year, without losing their ISA tax benefits.

Pension

From April 2016 the lifetime allowance for pensions tax relief will be restricted to £1 million. This will be indexed for inflation from April 2018. There is no change to the annual allowance.