Personal tax
Income Tax, personal allowances, rates of tax and thresholds for 2015 to 2016
For 2015 to 2016 the personal allowance for those born after 5 April 1948 will increase to £10,500 and the basic rate limit will be £31,785 for 2015 to 2016.
For 2015 to 2016 the starting rate for savings income will reduce from 10% to 0%, and the maximum amount of an individual’s savings income that can qualify for this starting rate will increase to £5,000. Savers who are not liable to pay Income Tax on their savings income can register to receive interest payments from their bank or building society without tax being deducted.
New Individual Savings Accounts (NISA), Junior ISA and Child Trust Fund (CTF): increasing flexibility for savers and investors
With effect from 1 July 2014, the annual subscription limit for cash and stocks and shares ISA will be equalised at £15,000, and restrictions on the transfer of funds between stocks and shares and cash ISAs will be removed. Consequential changes will be made to the rules concerning the securities and other investments that can be held in an ISA, and Core Capital Deferred Shares issued by a Building Society will also be eligible for investment in an ISA and CTF.
With effect from 1 July 2014, the annual subscription limit for Junior ISA and CTF will be increased from £3,840 to £4,000.
Capital Gains Tax (CGT): Non-residents and UK residential property
As announced in Autumn Statement 2013, legislation will be introduced to charge CGT on future gains made by non-residents disposing of UK residential property. A consultation on how best to produce the charge will be published shortly after the Budget. These changes will have effect from April 2015. Legislation will be in Finance Bill 2015.
Business tax
Annual Investment Allowance (AIA)
Legislation will be introduced in Finance Bill 2014 to increase the current temporary maximum of the AIA from £250,000 to £500,000. The legislation will also extend the period of the temporary increase. These changes will have effect from 1 April 2014 to 31 December 2015 for Corporation Tax and from 6 April 2014 to 31 December 2015 for Income Tax.
Increasing Small and Medium Enterprises (SMEs) payable Research and Development (R&D) tax credit
Legislation will be introduced in Finance Bill 2014 to increase the rate of R&D payable credit for loss-making SMEs to 14.5% from 11% for qualifying expenditure incurred on or after 1 April 2014. This will increase the rate of the cash credit payable to SMEs that conduct R&D, but do not have corporation tax liabilities.
Extending the Seed Enterprise Investment Scheme (SEIS)
Legislation will be introduced in Finance Bill 2014 to remove the time limit from SEIS and make it permanent. The legislation will also make permanent the CGT relief for reinvesting gains in SEIS shares. These changes will come into force from Royal Assent to Finance Bill 2014 and, for CGT reinvestment relief, have effect for 2014 to 2015 and subsequent years.
Property tax
Stamp Duty Land Tax (SDLT): threshold for the 15% higher rate for certain residential property transactions
Finance Act 2012 introduced a 15% rate of SDLT on the acquisition by certain non-natural persons of dwellings costing more than £2 million. Legislation will be introduced in Finance Bill 2014 to reduce this threshold to £500,000.
The new threshold will apply to land transactions where the effective date is on or after 20 March 2014. However the existing £2 million threshold will continue to apply, subject to exceptions, where contracts were entered into before that date.
Annual Tax on Enveloped Dwellings (ATED)
Finance Act 2013 introduced the ATED on certain non-natural persons owning UK residential property valued at more than £2 million. Legislation will be introduced in Finance Bill 2014 to reduce this threshold to £500,000.
From 1 April 2015 a new band will come into effect for properties with a value greater than £1 million but not more than £2 million with an annual charge of £7,000. From 1 April 2016 a further new band will come into effect for properties with a value greater than £500,000 but not more than £1 million with an annual charge of £3,500.
There will be a transitional rule for the £1 million to £2 million band requiring returns to be filed on 1 October 2015 and payment by 31 October 2015.
Accelerated payment in tax avoidance cases
As announced in Autumn Statement 2013, legislation will be introduced in Finance Bill 2014 to change tax administration to require taxpayers who have used avoidance schemes which are defeated in another party’s litigation, and who do not settle the dispute, to pay the disputed amount to HMRC on demand.
Following consultation, further legislation will be introduced in Finance Bill 2014 to extend accelerated payment of tax to users of schemes disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) rules, and to taxpayers involved in schemes subject to counteraction under the General Anti-Abuse Rule (GAAR), so that the amount in dispute is held by HMRC while the dispute is resolved. These changes will take effect from Royal Assent to Finance Bill 2014.
By David White a Partner in Charterhouse, based in Beaconsfield
