Summary of Tax Changes - April 2015


Following last month's budget, a raft of tax changes come into effect this month and we've summarised the most salient issues below.  A complete list of the measures can also be found here

Income Tax Rates:

Tax_2015

As of 6 April 2015 the personal allowance for those born after 5 April 1948 increased to £10,600, whilst the basic rate band was reduced to £31,785. As a result of this, those with income in excess of £42,385 will be subject to tax at the higher rate. For a list of the full tax rates in force for 2015/16 download our Tax Data Card here.

Pensions Reform:

The much debated new rules about pensions came into effect on 6 April 2015. These changes affect how people can access the money in their pension when they reach the age of 55.

Previously most pension savers had little other choice than to buy an annuity (an income for the rest of your life) when they retired. The reforms that have been made provide people with far greater access to their pension savings without giving the punitive tax charges that would have applied previously.

Capital Gains Tax on disposals of residential properties by non residents:

From 6 April 2015, non-residents are now liable to CGT on the disposal of UK residential property. The charge will apply to gains from 6 April 2015 and applies to:

  • Individuals
  • Partners in partnerships
  • Trustees of trusts
  • Close companies (broadly those controlled by five or fewer persons)

Corporation Tax:

As of 1 April 2015 there is now a single 20% rate of corporation tax. This single rate of corporation tax also means changes to the associated companies rules for the purposes of determining which companies are required to pay their corporation tax by quarterly instalments.

VAT:

The threshold for compulsory VAT registration has increased from £81,000 to £82,000. The turnover limit for when businesses can deregister from VAT has also risen by £1,000 from £79,000 to £80,000.

Rates of R&D Relief:

The rates of tax relief on research and development expenditure by companies both increased from 1 April 2015:

  • The rate of relief for small and medium sized companies has increased from 225% to 230%
  • Large companies (or small medium sized companies carrying out subcontracted or grant funded R&D projects) above the line relief increased from 10% to 11%.
  • From 1 April 2015 consumables used directly in R&D projects will only qualify for relief if they are not incorporated in items that are subsequently sold.

Diverted Profits Tax:

There is also a new tax on diverted profits that will see multinationals charged 25% on all profits artificially diverted overseas. This new tax is part of the governments aim to reduce what they see as large scale tax evasion being carried out by high profile companies.

The rate of tax is 25% and could apply where either the UK entity or the overseas entity has more than 250 employees, and turnover in excess of €50m or a balance sheet total in excess of €43m.

Annual Tax on Enveloped Dwellings:

The ATED applies an annual charge on residential properties owned by non natural persons. The amount of this charge depends on the value of the property. Previously this charge applied to properties with a value of more than £2m only. From 1 April 2015 this charge may also apply to properties with a value in excess of £1m.

For a full list of tax changes implemented on both 1 and 6 April 2015 please click here.

Our summary of tax changes can be downloaded here.

If you need any further advice on the new measures, please contact your usual Mitchell Charlesworth contact. Alternatively, please contact one of the team listed below:

Tim Adcock Graeme Davies Gemma Gower  

Tim Adcock
Tax Partner
Email Tim

Graeme Davies
Tax Manager
Email Graeme

Gemma McCaldon-
Gower

VAT Manager
Email Gemma

 

Dont forget that you can also download our latest Budget edition updates  (click the images to download):

Budget _book _front _page Talking Tax Logo Tax _Data _Card _Frontpage _2015_FINAL
Our 2015 Budget Summary provides an insight into all the main measures from the announcement. Our latest edition of Talking Tax provides an insight into three key areas from the Budget, the abolishment of the Tax Return, the changes to the retirement landscape and a summary of all the new Business tax measures. The Tax Data Card for this year incorporating new rate changes.

 

A complete list of the tax measures that came into effect on 1st and 6th April 2015*:

1st April 2015:

  • The Corporation Tax rate has been reduced to 20%
  • The new Diverted Profits Tax has been introduced
  • The bank levy has increased from 0.156% to 0.21%
  • Air Passenger Duty has been restructured - abolishing bands C and D
  • Hospice charities, blood bikes, search and rescue, and air ambulance charities will be eligible for VAT refunds

    Business rates changes (England only):
  • The business rates multiplier has increased from 48.2p to 49.3p (47.1p to 48.0p for small business multiplier). This includes the 2% inflation cap
  • The Small Business Rate Relief scheme has doubled for a further year - providing 100% relief for businesses with a single property with a rateable value of less than £6,000, and tapered relief with a rateable value of £6,000 - £12,000
  • The business rates discount for shops, pubs, cafes and restaurants with a rateable value of £50k or below has increased from £1,000 to £1,500

  • The cultural test for high-end TV tax relief has been modernised and the minimum UK expenditure requirement for all TV tax reliefs has reduced from 25% to 10%
  • A new tax relief on the production of children’s television has been introduced
  • The amount of banks’ annual profit that can be offset by carried forward losses has been restricted to 50%
  • Two new bands for the Annual Tax on Enveloped Dwellings (ATED) have been introduced
  • Capital Gains Tax exemption for wasting assets will only apply if the corporate selling the asset has used it in their own business
  • An investment allowance for North Sea oil and gas, replacing the existing offshore field allowances and simplifying the existing regime, has been introduced
  • A reduced rate of fuel duty to methanol will apply - the rate is 9.32 pence per litre
  • Fuels used to generate good quality electricity by CHP (combined heat and power) plants for onsite purposes are exempt from the Carbon Price Floor
  • Climate Change Levy main rates have increased in line with RPI
  • The VAT registration threshold has increased from £81,000 to £82,000 and the deregistration threshold from £79,000 to £80,000
  • Scottish government’s Land and Buildings Transactions Tax (LBTT) will replace Stamp Duty Land Tax in Scotland
  • The associated companies rules have been replaced with simpler rules based on 51% group membership
  • The standard and lower rates of landfill tax have been increased in line with RPI


6th April 2015:

  • Individuals over the age of 55 have flexible access to their defined contribution pension savings
  • The Income Tax Personal Allowance increases to £10,600
  • The higher rate income tax threshold increases to £42,385
  • The new Marriage Allowance comes into effect
  • The starting rate of savings income tax reduces from 10% to 0% for savings up to £5,000
  • The cash ISA limit increases to £15,240
  • Child Trust Funds can now be transferred into Junior ISAs
  • Spouses can now inherit their deceased partner’s ISA benefits
  • If an individual dies before the age of 75, they can now pass on their unused defined contribution pension savings free of income tax
  • Beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed term annuity can now receive any future payments from such policies free of income tax
  • Employers will no longer have to pay employer NICs for employees under the age of 21
  • Class 2 NICs for the self-employed can now be collected through Self-Assessment
  • The Employment Allowance extends to include people employing care and support workers to look after themselves or family members
  • A new annual remittance basis charge of £90,000 is introduced for non-domiciled individuals who have been resident in the UK in at least 17 of the last 20 years, and the charge paid by non-domiciled individuals who have been resident in the UK in at least 12 of the last 14 years has increased from £50,000 to £60,000
  • Non-UK resident individuals, trusts, personal representatives and narrowly controlled companies are now subject to Capital Gains Tax on gains accruing on the disposal of UK residential property
  • Capital Gains Tax annual exemption amount has increased to £11,100
  • The Capital Gains Tax charge on disposals of properties liable to ATED extends to cover residential properties worth £1 million - £2 million
  • The requirement that 70% of Seed Enterprise Investment Scheme money must be spent before EIS or VCT funding can be raised is removed
  • The Fuel Benefit Charge multiplier for both cars and vans increases by RPI
  • The Van Benefit Charge increases by RPI - in 2015-16 the Van Benefit Charge rate paid by zero emission vans is 20% of the rate paid by conventionally fuelled vans
  • Tax Credit payments are stopped in-year where, due to a change in circumstances, a claimant has already received their full annual

 *Data sourced from HMRC Website

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