Mitchell Charlesworth unveils the expectations of the 2015 Post Election Budget

Following the Conservative victory at the General Election in May, the Tory Government will be announcing their first Budget on 8 July 2015. Chancellor George Osborne is expected to reiterate the Tories’ plans to raise money through a clampdown on tax evasion and aggressive avoidance, increase funding for the National Health Service, reform welfare and cut government spending.

Tim Adcock
Pictured: Tax Partner
Tim Adcock

Mitchell Charlesworth partner Tim Adcock said ‘As the Conservatives do not have to compromise on any  of their pre-election promises in order to accommodate a coalition partner, we should have a good idea of what will happen in the world of tax, based on the Conservative manifesto. However, nothing is set in stone and some impending changes may not happen and those bitter tax pills are likely to happen now rather than later in the parliamentary term’.

Pre-election, the Tories made it clear they would be making £12 billion a year of cuts to working-age benefits, while leaving pensioners' benefits well alone. That's alongside reducing day-to-day government spending by £13 billion and raising £5 billion from tax-avoidance measures in a bid to eliminate the budget deficit by 2018-19.

Mr Adcock has commented on the likely tax changes ahead of the second budget announcement, he said:

  • Increase the personal allowance to £12,500

The last Budget of the Conservative and Liberal Democrat coalition government in March 2015 announced that the personal allowance would increase from £10,600 in 2015–16 to £10,800 in 2016–17 and £11,000 in 2017–18. We now know that the personal allowance will increase to £12,500 by 2020–21, however, what we do not know yet is whether the planned increases will change or whether all the changes will occur between 2018-19 and 2020-21. All will be revealed’.

  • Income tax threshold increased to above £50,000

More and more people have been dragged into the 40p tax rate, with an estimated 4.6m people paying the higher rate in 2014–15 compared to 2m people in 1994–95. However, in the next five years, according to the manifesto by 2020-21, no one earning less than £50,000 will pay the higher rate of income tax. The question is will the rate start to be increased from the current rate of £42,385 this year or later in the term’.

  • Increase the inheritance tax threshold for married couples and civil partners to £1m

‘A new transferable allowance for main residences when they are passed to children and grandchildren of £175,000 per person could be introduced. This gives couples a potential allowance of £1m (the current £325,000 nil rate band plus £175,000 each). This new allowance is to be tapered away from those leaving more than £2m of property with the intention that those leaving more than £2.35m of property will not benefit from the new allowance at all’.

  • Reduce the tax relief on pension contributions for people earning more than £150,000

‘To pay for the new transferable main residence IHT allowance, the Conservatives may reduce the annual allowance for pension contributions for those with income over £150,000. The annual allowance could be tapered away from £40,000 for those with incomes over £150,000, down to £10,000 when an individual’s income reaches £210,000 – therefore effectively increasing the marginal tax rate faced by many of those with an income between £150,000 and £210,000 a year and allowing anyone with an income of up to £150,000 to put £40,000 tax free into a pension, but restricting relief for pension savers on higher incomes’.

  • Crack down on tax evasion and aggressive tax avoidance

To boost the Treasury’s income, the government proposes to continue to tackle tax evasion and aggressive tax avoidance and tax planning. A figure which has been banded around is to raise a further £5bn from measures such as increasing the annual tax charges paid by non-doms and tackling abuses of this status. More work on the international stage is also likely to ensure global companies pay their fair share in tax and making sure that penalties are harsh enough to punish and deter.

For more information contact Tim Adcock on 0151 255 2300 or send Tim an email .

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