We are in the midst of a very closely fought election campaign and many parties may gain significant influence on the future of our country and tax system producing a possible second Budget for 2015. The recent budget made changes that should have a small but positive impact on all sections of the community and, for our clients, that includes Class 2 NIC being abolished, Farmers’ Averaging being extended to five years from April 2016 and Corporation Tax fixed at 20%.
For savers there is a new allowance from next year which exempts from tax savings income of £1,000 for basic rate taxpayers, £500 for higher rate but none for additional rate. This may lead to the deduction of tax at source being abolished. Further, if the first taxable part of income is from savings up to £5,000 will be charged at 0%. From April 2015 up to £1,060 of unused personal allowance can be transferred between spouses if they are no more than basic rate taxpayers. Potential first time house buyers who are saving may wish to take advantage of the Help to Buy ISAs from late 2015.
Employers have RTI well established but penalties/interest is now in force for late filing and payment. The £2,000 Employment Allowance for Employer’s NIC, remains for 2015/16 but must be claimed. Small employers are being notified of Pension Auto Enrolment staging dates and early action is vital. An overhaul of the P11D Benefit regime is planned for April 2016 which may include the removal of the £8,500 threshold and the payment of tax on benefits within the regular payroll run.
Personal pension changes came into force on 6 April 2015 so you need to consider the full impact of pension withdrawals by consulting not only ourselves but also a Financial Advisor as there are so many options available. You may act in haste but repent at your leisure. There can be significant tax implications with lump sum withdrawals which may also affect tax credits awards
Changes were announced to the Tax Return reporting regime and the process for paying tax. The proposal is to be phased in from early 2016 but few details are currently available. Check the HMRC website for updates.