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Budget Highlights

Posted on 08/07/15

The Chancellor made it clear that he wanted a second budget in 2015 in order to deliver on the Conservative pre-election promises, a Budget that puts ‘economic security first’. A ‘big Budget for a big country with big ambitions’. This budget, the first Conservative Budget in 19 years, was trailed as focusing on tax avoidance, aggressive tax planning by the wealthy and welfare reforms. He promised a ‘laser like focus’ on raising productivity and living standards that would ‘deliver on the commitments…made to working people’.

Here are the highlights;

Faster growth than any other developed nation

OBR forecast of 2.3% in 2016 and 2.4% in 2017

OBR forecast £1m more jobs over the next 5 years

Deficit is half of the 50% level of five years ago

Plans to cut the deficit at the same pace as the last Parliament

£37bn of consolidation is required over the next 5 years

Need to deliver £17bn of savings now

Welfare

Rise in the living wage to £7.20 in April 2016 and to rise to £9 by 2020


Further £8bn for the NHS by 2020


£12bn in spending cuts on welfare over the next 3 years, instead of 2


A lower Benefits cap of £23,000 per annum in London, £20,000 elsewhere


‘Earn Or Learn’ reforms for 18 to 21 year olds


Free childcare of 30 hours a week for parents of 3 and 4 year olds


Working Age Benefits frozen for 4 years


Local Authority or Housing Association tenants to pay up to the market rent 


Scrapping of undergraduate maintenance grants, which will be converted into loans. But the maintenance loan will rise to £8,200 in the 2016/7 academic year


Removal of the cap on student numbers


Limiting tax credits to the first 2 children in any family from 2017


Rents in the social housing sector to be reduced by 1% each year over 4 years

Tax

Pension tax relief for high earners to be restricted from April 2016


Taxation of dividends to be overhauled from April 2016 in a bid to stop tax driven incorporations


Personal tax allowance rises to £11,000 in 2016
40% tax threshold rises from £42,325 to £43,000 for higher rate taxpayers in 2016


No increase in income tax, NIC or VAT before 2020 – the ‘triple tax lock’ will be legislated 


Corporation Tax to be reduced from 20% to 19% in 2017 and 18% in 2020


£0.75bn investment in the HMRC to tackle avoidance – no artificial values on stock – tackling disguised employment


Naming and shaming of those involved in failed tax avoidance schemes


Major Non Dom status reforms – if you are born in the UK to Non Dom parents you will not be able to claim Non Dom status. Plus permanent Non Dom status is to be abolished


Bring forward Corporation Tax payments dates to be closer to the date that profits are earned for companies with greater than £20m profits


Corporation tax relief for acquired goodwill to be abolished for new acquisitions from today


Restriction of tax relief for interest paid by buy-to-let landlords from 2017


Wear and tear allowance to be abolished for buy-to-let landlords from April 2016


Reduce the Bank Levy rate
Introduction of a 8% surcharge on bank profits in 2016


Insurance Industry reforms – regulation of claims management companies – Insurance Premium Tax to rise to 9.5%


New Vehicle Excise Duty levels for new cars in 2017, stratified as Zero, Standard and Premium


MOTs on new cars to shift from 3 years to 4 years


Fuel duty remains frozen


Raise the inheritance tax threshold for properties of £1 million for married couples by 2017

Savings

New Pensions Green Paper to be launched to explore further reforms

Business

Sunday trading reform – to be left to local decisions
Creation of 3 million more apprenticeships


Apprenticeships levy for large firms
Annual Investment Allowance will not reduce to £25,000, but be set at £200,000 from January 2016


Employment Allowance increased to £3,000

Public Services

Cost savings at Whitehall


Cost of free TV licences for the over 75s to be transferred to the BBC


Devolution of power in England - the 10 Councils in Greater Manchester will have new devolved powers. This process is open to other Cities that introduce elected Mayors

If you have any questions regarding our budget highlights please contact your nearest Wilkins Kennedy office.

Matthew Hall


Partner, Head of Tax at Wilkins Kennedy

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