Autumn Statement 2015

On 25th November, the Chancellor delivered his much awaited spending review and Autumn Statement 2015. The question is: Will you benefit from the proposed changes? It is important to note that many of the changes will not come into effect until next year at the earliest and certain specifics won’t be known for several weeks yet. Below is a summary of some of the key announcements:

Business Tax

RTI – relaxation for micro-employers will end on 5 April 2016. After this date, they will be required to report all payments on or before each and every pay day.

Capital Allowances – the limit for 100% relief for equipment will be reduced from £500k to £200k per annum in 2016.

Corporation Tax – from April 2015 the rate was set at 20% for all companies, this will reduce to 19% in April 2017 and 18% in April 2020.

Farmers’ Averaging Relief – in line with previous announcements, the averaging period for self-employed farmers is being extended from 2 to 5 years from April 2016. Farmers will have the option of using either averaging period.

National Insurance Contributions (NICs) – there is no employer’s NICs for employees under 21 years of age. Remember that the Living Wage is introduced from April 2016 (from £7.20 per hour).

VAT – EU regulations prevent the government from making sanitary products zero-rated. Therefore for the life of this parliament or until EU law permits zero-rating of these items, a fund of £15m per year to support women’s charities is being created (the sum equivalent to the annual VAT raised on sanitary products).

Stamp Duty

A higher rate of Stamp Duty Land Tax (SDLT) will be applied to purchases of additional residential properties above £40,000 in value e.g. second homes and buy to let properties. The rate will be 3% above the current SDLT rate.

This will not apply when buying houseboats, caravans or mobile homes, or to companies / funds making large investments in residential property.

Autumn Statement 2015Personal Tax

Dividend Income – from April 2016 the dividend tax credit will be replaced by an allowance in line with announcements made during the summer statement – further details can be found here.

Inheritance Tax – the nil rate band is frozen at £325,000 until 2021 but has been extended to £500,000 from April 2017 for family homes. There is also exemption for pension funds transferred on death before age 75.

Property Income – from April 2016, Rent-a-room relief will be increased to £7,500 pa and a new system of governing wear & tear allowances will commence.

Company Car Tax Diesel Supplement – from April 2016, the 3% differential between diesel and petrol was to be abolished but this will now be retained until April 2021 when new EU-wide testing procedures will be in place to ensure air quality standards when driving under ‘real world’ conditions.

This is a selective summary of the announcements made by The Chancellor during his Autumn Statement 2015; details of the complete statement can be found here along with a pdf of the Autumn Statement 2015 itself.

If you have any queries about your personal or business tax following these announcements, please contact Mike or Lynn for a free, confidential consultation on 01280 818776 or by email at info@balmeraccountancy.co.uk.

 

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