post budget update seminar friday 20 march 2015
TRANSCRIPT
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AGENDAMurray Graham - Introduction
Colin Fish - Main tax issues
Liz Hill - VAT and indirect tax
Mary Schofield - The tax policies – a comparison
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THE 2015 ELECTION STARTS HERE!
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George Osborne’s View
A growing economy
National debt down as a share of the economy
A record number of jobs
Rising living standards
The deficit is down
“Britain is now walking tall again”
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• “Here comes the sun (or a least that’s what he wants you to think)”
• “Extreme plan”...future…“colossal spending cuts”
• “Rollercoaster ride in public spending”
The Guardian
Ed Miliband
The Times
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Help for the North,
what about the East?
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Colin Fish
Personal tax changes
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Personal allowances
2015/16 £10,600
2016/17 £10,800
2017/18 £11,000
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Higher rate threshold
2015/16 £42,385
2016/17 £42,700
2017/18 £43,300
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The end of the tax return?
• How will it work? • Everyone will have a digital tax account • The national insurance contributions and
pension position will be shown in the account
• Any interest from the banks will also be shown
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The end of the tax return?
• Taxpayer logs on to check and confirm the details are complete and correct
• Higher earners can add the additional information
• Taxpayers can pay as they go (rather than having an annual large tax bill)
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The end of the tax return?
• The agent of the taxpayer can also be given access
• The timetable is as follows:– Early 2016 - £5m small businesses and £10m
individuals to have access– By 2020 more than £50m individuals and
small businesses will have access
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The end of the tax return?
• Rental income/dividend income etc will need to be reported
• How accurate will reporting be?• Paper returns will still be available
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National insurance
• Class 2 national insurance will be abolished in the next Parliament
• Reform of class 4 • Consultation on the detail and timing later
in year
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Savings and investments
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Help to buy - ISA
• For every £200 a first time buyer saves, the Government will add £50
• Maximum bonus is £3,000 on £12,000 of savings
• Available for four years from Autumn 2015• Initial deposit of £1,000 and then monthly
savings• One per person (rather than per home)
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Help to buy - ISA
• Bonus is in range £400 to £3,000• Available for home purchases of up to
£450,000 in London and £250,000 outside London
• The bonus is paid when the first home is bought
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Personal Savings AllowanceIncome Personal savings allowance
Up £16,800 No tax on savings income
£16,801 to £42,700 £1,000
From £42,701 to £150,000 £500
Over £150,000 of income NIL
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Personal Savings Allowance
• The banks and building societies will stop deducting 20% in income tax from non-ISA savings
• More will be paid through self-assessment for those with high interest
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Annuities
• From April 2016 people receiving an annuity can assign the income to a third party in exchange for a lump sum or alternative retirement product
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ISAs• From summer 2015 investments in quoted
bonds from smaller companies can be held in an ISA
• Also equity securities in crowdfunding platforms
• Response to consultation on peer-to–peer loans
• Can withdraw and replace money from a cash ISA
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Pensions
• The lifetime allowance is to be reduced from £1.25m to £1m from 6 April 2016
• Indexed with CPI after 2018
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Inheritance tax
• Deed of variation
• Consultation over the next few months
• Increases importance of making sure that Wills are in the right form
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Other matters
• Farmers averaging – over five years
• Changes to VCTs and EIS
• Personal service companies/umbrella companies – travel and subsistence
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Capital gains tax
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Entrepreneurs’ Relief
• ER denied on disposal of company that is not a trading company in its own right (joint ventures)
• Also denied on the sale of a personal asset unless 5% of the shares in the company are sold
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Entrepreneurs’ Relief
• Goodwill on incorporation
• ER kept where deferred into EIS etc
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Residential property – non-residents
• Capital gains tax of 28% or 18% (or 20% if held by a company) on sale of residential property by a non-UK resident
• PPR relief restricted on properties in countries in which owner is not resident
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Business tax
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Corporation tax
• Reminder of the rates:
– 20% from April 2015
• Associated companies rules simplified
• Based on 51% group ownership from 2015
• Relevant for quarterly instalments
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Corporate tax – capital allowances
• Current AIA is £500,000• Due to decrease from 31 December 2015 to
£25,000 (new rate to be announced in the Autumn?)
• Beware restriction for spend as we get nearer to the end of year
• Seek advice before major acquisitions
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Corporate tax – AIA rates (companies)
Prior to1 January
2013
1 January 2013 to 31 March
2014
1 April 2014 to 31 December
2015
From1 January
2016
£25,000 £250,000 £500,000 £25,000
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Corporate tax – Restriction for Goodwill
• Restricted relief where acquired from a related party– Eg customer lists – Personal goodwill
• Acquisitions on or after 3 December 2014
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Corporation tax – R&D tax credit
• Research and development tax credits
• Rate of enhancement from 225% to 230% from 1 April 2015
• Either the amount of costs deducted can be enhanced or a tax repayment claimed
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Corporation tax – R&D tax credit
• Repayment is 14.5% of the loss for SMEs
• Repayment will be 33.4p rather than 32.6p
• Voluntary advance assurance process for first claims for SMEs
• Further guidance to be issued
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Business rates
• Review being carried out• Current system does not take account of
state of economy etc• ‘Bricks and mortar’ businesses at a
disadvantage?• Results to be announced in Budget 2016
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“Google tax”
• Tax on diverted profits• 25% rate on profits made in the UK and
diverted abroad• Expected to raise £1bn over five years• Higher than corporation tax rate to
encourage companies to register in the UK
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Liz Hill
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Budget 2015
• From 1 April 2015
– VAT registration threshold rises to £82,000
– Deregistration threshold rises to £80,000
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Budget 2015
• Beer duty down 1p per pint from 23/3/15• Cider and spirits duty down 2% from
23/3/15• Duty on wine is frozen• Tobacco duty increase of 16p per packet of
20• Fuel duty increase set for September 2015
is cancelled
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Budget 2015
• Palliative care charities and medical courier charities– From 1 April 2015– Section 33 bodies– Can reclaim VAT on non-business activities– Submission of regular claims in certain
format to HMRC
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Budget 2015
• Partial exemption calculations
– UK business with foreign branch making supplies of financial services outside EU
– Income classed as “taxable”– Boosts partial exemption recovery rate– From 1 August 2015 such income is
excluded
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Budget 2015• Airline passenger duty• Landfill tax• Climate change levy
– All to increase by retail prices index on 1 April 2016
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Budget 2015
• Aggregates levy remains £2 per tonne
• Rural fuel rebate scheme extended to 17 areas in the UK from 1 April 2015, but not East Anglia
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Other VAT Changes
• MOSS (mini one stop shop) commenced 1/1/15
– E-services – sold to private individuals– Within the EU
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Other VAT Changes
• E-service examples– Apps– E-books– On-line training– Music and video downloads– Broadcasting – Telecommunications
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Other VAT Changes
• 28 member states• VAT registration due £1+• MOSS allows registration in one EU country• One VAT return accounting for all EU sales• Pay VAT to HMRC, no reclaim of costs• No accounting for UK sales if under VAT limit
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Autumn Statement 2014
• Search and rescue bodies
– From 1 April 2015– Section 33 body – Reclaim of UK VAT non-business costs
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Mary Schofield
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ConservativesBusiness Tax• Corporation tax
– In 2010 (when the Conservatives came to power) the CT rate was 28%
– Gradual reduction in rates
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ConservativesBusiness Tax• Corporation tax
– With effect from 1 April 2015 main rate of CT is 20%
– Suggested policy to reduce the CT rate further
– “Most competitive in the G20”
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ConservativesPersonal Tax• Income tax
– Personal allowances• In 2010 PA was £6,475, steady increase
during the current parliament• For 2015/16 the PA is £10,600
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ConservativesPersonal Tax• Income tax
– Personal allowances• PA will potentially be increased to
£12,500 by 2020• 2010/11 the PA was tapered away for
those earning in excess of £100,000 no sign it will be re-introduced
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ConservativesPersonal Tax• Income tax
– Basic rate band• 40% tax rate at £31,865 (2014/15)• Potentially raising 40% tax rate threshold
to £50,000 by 2020
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ConservativesPersonal Tax• Income tax
– Inheritance tax• Nil rate band is currently £325,000 with
effect from 2009/10• Raising the threshold to £1m has been
discussed• Should the family home be within the
charge to IHT
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Liberal Democrats
Business Tax• Corporation tax
– Introduction of a Bank levy at 8%– Additional to the existing bank levy– Clamp down on corporate tax evasion
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Liberal Democrats
Personal Tax• Income tax
– Personal allowances• Increase to £11,000 in first year of
government• Potentially rising to £12,500 by 2020
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Liberal Democrats
Personal Tax– Capital gains tax
• Current rate of capital gains tax is 18% or 28% depending upon marginal rate of income tax
• Pledge to increase higher rate to 35%• Potentially reduce the annual exemption
currently at £11,000 (2014/15) to £2,500
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Liberal DemocratsPersonal Tax• Income tax
– Mansion tax• An annual tax on properties worth over £2m• 0.5% of home affected• 50% of London houses valued at over £2m
owned by overseas investors• £2m will rise with inflation
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Labour PartyBusiness Tax• Business rates
– Premises rateable value of £50,000 or less• Rate cut 2015/16• Rate freeze 2016/17
– Impact 1.5m small business• Corporation tax
– Reverse the 1% reduction to 20% to be introduced April 2015
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Labour Party
Personal Tax• Income tax
– George Osborne abolished 50% rate 2013/14
– Reintroduce 50% top rate for those with income in excess of £150,000
– Reintroduce 10% starting rate
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Labour Party
Personal Tax• Mansion tax
– Properties worth over £2m– Deferral for those earning less than
£42,000 a year– “simple” system of bands relying on self-
valuation
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Labour Party
Personal Tax• Pensions tax relief
– Propose to reduce tax relief on pensions for those earning over £150,000
– Tax relief at 20%
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Labour PartyPersonal Tax• Pensions tax relief
– Reduce the annual allowance from £40,000 to £30,000
– Reduce the lifetime allowance from £1.25m to £1m
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UKIP
Business Tax• Turnover tax
– Consider introducing a flat rate tax calculated as a percentage of turnover
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UKIPPersonal Tax• Income tax
– Personal allowance• Raise to £13,500 by 2020
• Tax rates– Introduction of 35% rate for those earning
between £42,285 and £55,000• Inheritance tax
– Abolished!
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Green PartyBusiness Tax
Personal Tax• Tax rates
– Introduction of 50% tax rate for those earning in excess of £100,000
• Wealth tax– Introduction of 1% to 2% tax on those worth
£3m or more
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SNPBusiness Tax• Corporation tax
– Stepped away from Alex Salmond’s 3% cut to CT
Personal Tax• Income tax
– Increase for those earning £100,000 per annum
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SNPPersonal Tax• Transaction tax on property
– Replaces stamp duty in Scotland from 1 April 2015
– Original announcement was 10% on properties valued between £250,000 and £1,000,000
– Revised down to 5% for lower value properties
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Election tax planning
Capital gains tax• Entrepreneurs’ Relief Limits Rate
Pensions• Maximum contribution now / include
unused carry forward allowance
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QUESTIONS?
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