Here are the main announcements from Budget 2015, with a particular focus on measures which affect small businesses and company directors.
- The UK economy grew faster than ‘any other major economy’ over the past year (by 2.5% during 2014), and is expected to continue between 2.3% and 2.4% over the next four years.
Inflation is expected to fall to just 0.2% during 2015.
- The personal allowance will rise to £10,800 in 2014/15, and to £11,000 the following year.
- The higher rate income tax threshold will rise from £42,385 to £43,400 from April 2015.
- The Chancellor hopes to raise these thresholds to £12,500 and £50,000 respectively over the course of the next 5 years.
- The current Self Assessment Tax Return process will be replaced by a paper-free ‘digital’ service by 2020. Lee Perkins, MD of Sage UK commented: “Creating digital tax accounts for all strips out an annual burden, and businesses will welcome steps to make ‘tax less taxing’”.
- The annual ISA savings limit will rise to £15,240.
- As pre-announced, the Government is set to conduct a ‘once in a generation’ review of business rates, to reflect the changing face of business over the past few decades. Perkins commented: ” It is time business rates are brought into the 21st Century, and it must balance the challenges faced by the British high street while addressing the rise of work at home entrepreneurs.”
- The main rate of Corporation Tax will fall by 1% to 20% from April 2015 – as pre-announced. This is the same rate as small business owners currently pay (the ‘small profits rate’).
- The lifetime pensions tax allowance will be reduced from £1.25m to £1m.
- Class 2 National Insurance Contributions (NICs) will be abolished over the lifetime of the next Parliament.
- Tax breaks are to be introduced for North Sea oil and gas producers to help offset the effects of the current low oil price.
- From 2016, a new savings tax-free allowance will be introduced – £1000 p.a. for basic rate taxpayers, and £500 for higher rate taxpayers.
- Following a consultation period, the Government says it will ‘implement a package of measures to improve the accessibility of R&D tax credits for smaller businesses.’
- The Chancellor didn’t provide any clarity over the future of the Annual Investment Allowance, which is currently £500,000 per year – and could fall back to the old £25,000 rate from January 2016. It seems likely that we will have to wait until the next Autumn Statement before Chancellor confirms what level the AIA will be from 2016 onwards.
- The Entrepreneurs’ Relief rules are to be tightened up to ensure that only owners selling shares in ‘genuine businesses’ are able to benefit from the lowered 10% capital gain concession.
- Fuel duty will be frozen for the rest of 2015.
- For the full details, and associated paperwork and guidance, visit the GOV.UK Budget 2015 microsite.
- More to follow…