Following the Chancellor's Emergency Budget on Wednesday 8 July 2015, we have compiled a list of some of the key announcements you need to know about. That way you can then plan both your business and personal finances accordingly.
The 10% dividend tax credit will be abolished as of April 2016. Instead there will be a £5,000 tax-free allowance with anything above that level subject to tax rates of 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
From 2017 there will be a main residence nil rate band in addition to the existing £325,000 (nil rate band) allowance. This will start at £100,000 and then increase to £175,000 per person as of April 2020. This means if you're a married couple, or in a civil partnership, then your combined inheritance tax threshold will rise to £1m by 2020 provided you qualify under the new rules.
The tax-free personal allowance will rise from £10,600 to £11,000 for the 2016/17 tax year. Meanwhile effective from April 2016 the 40% income tax band will rise from £42,385 to £43,000.
The national insurance contribution (NIC) employment allowance will rise from £2,000 to £3,000 as of April 2016. However, if you're both a director and the sole employee of your company then you won't be able to claim the allowance.
Buy-to-let landlords will only be able to claim relief on mortgage interest payments at the basic rate of income tax. The good news if this applies to you is that it will commence in April 2017 and be phased in over 4 years. Also, the tax relief on the rent a room scheme is to rise from £4,250 to £7,500 from April 2016.
A new banding system of vehicle excise duty will commence for brand new cars after 31 March 2017. The duty on existing vehicles will remain the same.
The annual investment allowance (a tax allowance for businesses capital expenditure), will reduce from £500,000 per annum to £200,000 from 1 January 2016.
Many of the changes highlighted are somewhat complicated, so we will be producing more detailed posts where appropriate in due course.
As of April 2016 the minimum wage will be replaced by a new compulsory national living wage. This will see all workers aged 25 and over paid a minimum of £7.20 per hour with the aim of achieving £9 per hour by 2020. These new rules will apply to both full time and part time employees.
The content of this post is up to date and relevant as at 15/07/2015.
Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.
leave a comment -