Following the Chancellor’s Autumn Budget announcement and our successful Budget Breakfast event, we are pleased to provide the presentation slides from the event and our usual detailed Budget analysis.
By: Anne Wilson
Tax advisors and MPs will have a little light holiday reading to enjoy following George Osborne’s emergency budget which will take place on 8th July. Having shaken off the Lib Dems, the government is keen to make its mark on tax policy as soon as possible.
One promise was the introduction of a “tax lock” to prevent increases in VAT, National Insurance Contributions or Income Tax during the life of the parliament. Why does this commitment need to be legislated for; are politicians so untrustworthy as to break a promise!
The personal allowance will be increased so that by 2021 this will be £12,500. The personal allowance will be linked with the minimum wage so anyone earning the minimum wage and working for 30 hours a week should not pay any tax. This suggests that the minimum wage will be £8 an hour by 2021.
Alongside these measures is the target to raise the basic rate band so that by the end of the parliament no one with income of less than £50,000 will pay tax at the higher rate. The basic rate band has been eroded over the years, in 1994/95 approximately 2m people were paying tax at the higher rate compared with 4.6m people now.
A new transferable inheritance tax relief will be introduced to enable a couple to pass an additional £175k each of value in their main residence to their children so that potentially they could leave £1m to their children without inheritance tax.
The relief tapers away where the estate is worth more than £2m. This seems likely to add fuel to the fire of the north/south debate as this is will be of far greater benefit to taxpayers in high property value areas.
For example a couple whose only asset is a property worth £1m could leave this to their children free of inheritance tax. Contrast this with a couple with a property worth £200k and investments worth £800k, their estate would suffer inheritance tax of £140k! It is unclear at present if the £175k is the top slice of the estate and how it will interact with the nil rate band.
There is also a proposal to limit tax relief for pension contributions for high earners. It is thought that relief will be restricted for those with incomes of between £150k and £210k with the current contribution limit of £40k tapering away so that the maximum someone with income of £210k can contribute to a pension scheme and claim tax relief on will be £10k.
These are the manifesto pledges but we can expect to see other changes, it is possible that the child benefit high income withdrawal will be calculated by reference to a couple’s income. This will correct an anomaly, currently a couple with income of £49k each can still claim benefit whereas a couple with one earner who has income of £60k loses the allowance in full.
There are question marks over the top rate of Capital Gains Tax which was not included in the tax lock announced in the Queen’s speech. It would also be useful for businesses to know sooner rather than later what the annual investment allowance for capital allowances will be on 1 January 2016.
We shall have to wait and see what other surprises the Chancellor has in store.
Read the Budget document in full.
Download our detailed budget report as a pdf.
The Chancellor has presented his Budget to Parliament – here’s a summary of what was announced.
The UK economy had the fastest annual growth among G7 economies in 2014, and the strongest annual growth since 2007. At the end of 2014, employment had reached its highest ever level, unemployment has been falling in every region across the UK, and inflation is at a record low.
But risks still remain and there is still more to do to support businesses and boost p
Read the Budget document in full.
Debt will be falling as a share of GDP from 2015-16. This is a year earlier than forecast at Autumn Statement.
By 2014-15, the deficit is forecast to have fallen by half, from 10.2% at its peak in 2009-10, to 5% in 2014-15.
In 2018-19, the government will have a surplus (will raise more in taxes than is being spent) of £5.2 billion.
Access the Treasury’s set of Budget infographics, explaining some of the key announcements.
To make work pay and ensure families keep more of the money they earn, the tax-free personal allowance – the amount people earn before they have to start paying tax – will rise to £10,800 in 2016-17, and £11,000 the year after.
The increases to the personal allowance from £6475 in 2010, to £11,000 in 2017-18 will save a typical taxpayer £905.
To make sure the full benefits of the personal allowance increase are passed on to higher rate taxpayers, the government will also increase above inflation the point above at which higher earners start paying 40% tax. It will increase by £315 in 2016-17, and by £600 in 2017-18 – taking it to £43,300 in 2017-18.
From April 2016, a tax-free allowance of £1,000 (or £500 for higher rate taxpayers) will be introduced for the interest that people earn on savings.
If they are a basic rate taxpayer and have a total income up to £42,700 a year, they will be eligible for the £1,000 tax-free savings allowance.
If they are a higher rate taxpayer and earn from £42,701 to £150,000, they’ll be eligible for a £500 tax-free savings allowance.
Access the Treasury Personal Savings Allowance one page explainer factsheet.
The government has already helped people to buy a home with Help to Buy, which allows people to purchase a home with just a 5% deposit.
The government is now going further. To help first time buyers save for a deposit, it is introducing a Help to Buy ISA.
People will be able to open an ISA, save up to £200 a month towards their first home, and the government will boost it by 25%. That’s a £50 bonus for every £200 people save, up to £3000.
Access the Treasury’s Help to Buy: ISA one page explainer factsheet.
ISAs are being reformed so that instead of being able to put up to £15,240 in the 2015-16 tax year into an ISA in total, people can take out their money and put it back in within the same year, without losing their ISA tax benefits – as long as the repayment is made in the same financial year as the withdrawal.
An extra £1.25 billion will be spent on mental health services for children and new mums – helping more than 110,000 people.
Fuel duty will be frozen again; since 2011, the government has cut and frozen fuel duty, saving a typical motorist a total of £675 by the end of 2015-16.
By the end of 2015-16 fuel duty will have been frozen for five years, resulting in the longest duty freeze in over 20 years.
There will be another penny off a pint, a 2% cut for spirits and most ciders, and a freeze on duty on wine.
From April 2016, people who already have an annuity will be able to now effectively sell it on, so that they too can benefit from the pension freedoms announced at last year’s Budget.
Currently, people who have bought an annuity are unable to sell it without having to pay at least 55% tax on it. From April 2016, the tax rules will change so that people who already have income from an annuity can sell that when they choose and will pay their usual rate of tax they pay on income, instead of 55%.
The amount of small donations charities can get an extra 25% top up payment on in gift aid without needing any paperwork is increasing from £5,000 to £8,000 a year.
The government expects 6,500 charities to claim in full the higher new cash boost of £2,000 a year – nearly double the current amount.
This extends the period from two to five years, and will give farmers additional security as they typically have volatile profits due to uncontrollable factors such as the weather.
Millions of individuals will have the information HMRC needs automatically uploaded into new digital tax accounts. Businesses will feel like they are paying a simple, single business tax – and again, for most, the information needed will be automatically received.
Working with Transport for the North, the government will look at rolling out better roads, quicker journeys and improved rail connections between the major cities of the north, as part of the government’s plan to build a Northern powerhouse.
The government is also giving even more powers to local areas, with a new devolution deal for things like transport, business support and skills for West Yorkshire, and more planning powers for London.
Ten Enterprise Zones across the country are also being supported to go further to create growth and jobs.
The government is also working on a Cardiff city deal and opening negotiations on the Swansea Bay Tidal Lagoon.
The government is increasing the rate of the bank levy (one of the taxes that banks pay) from 1 April 2015.
This will raise an additional £900 million a year.
The oil and gas sector provides highly-skilled jobs, energy security and makes a significant contribution to the UK economy.
To encourage further investment in the North Sea, the government will introduce a new Investment Allowance and reduce the supplementary tax charge on oil and gas companies further, from 30% to 20%, from 1 January 2015.
The rate of Petroleum Revenue Tax paid on older oil and gas fields will also be reduced from 50% to 35%.
These changes are expected to increase oil production by around 15% by 2019, and drive £4 billion of new investment over the next five years.
The government is investing up to £600 million to deliver better mobile networks, and is announcing a new ambition that ultrafast broadband of at least 100 megabits per second should become available to nearly all UK premises in the country.
Loans up to £25,000 will be available for postgraduate PHD and masters research students.
The government will also conduct a review into how the government can strengthen its funding for postgraduate research.
Future economic success depends on future science success. The government is investing £140 million in world class research on the infrastructure and cities of the future, and £40 million in research into what is known as the Internet of Things. This is the next stage of the information revolution, connecting up everything from urban transport to medical devices to household appliances.
The government is also launching a new UK research initiative into the future potential of digital currency technology, supported by a £10 million increase in funding in this area.
Local newspapers are a vital part of community life, but they’ve had a tough time – so the government is announcing a consultation on how to can provide them with tax support.
**UPDATE** Click here to download our detailed report in pdf format.
First published: 3 December 2014
The Chancellor has presented the Autumn Statement to Parliament – here’s a summary of what was announced.
The UK has the fastest growth in the G7, there are more people in work than ever before, and the deficit is forecast to fall by a half by the end of 2014-15. But there are still difficult decisions ahead to continue to lower the deficit and to cut debt.
Under the old rules, you would have paid Stamp Duty Land Tax at a single rate on the entire property price. Now, you will only pay the rate of tax on the part of the property price within each tax band – like income tax. Under the old rules, if you bought a house for £185,000, you would have had to pay 1% tax on the full amount – a total of £1,850. Under the new rules you don’t start paying tax until the property price goes over £125,000, and then you only pay tax on the price of the property within the tax bands over that price. Under the new rules, you’ll pay nothing on £125,000 and 2% on the remaining £60,000. This works out as £1,200, a saving of £650. This will make the system fairer, and means stamp duty will be cut for 98% of people who pay it.
The personal allowance – the amount you earn before you have to start paying income tax – will be increased again from £10,000 to £10,600 in 2015 to 2016. Typically, someone earning between £10,600 and £42,385 will be £825 better off by 2015-16 as a result of increases in the tax-free personal allowance since 2010. Even while making difficult decisions to fix the economy, since 2010, the government has cut income tax for 26.7 million taxpayers.
This will apply for under 12s on flights from 1 May 2015, and for under 16s from 1 March 2016 – saving an average family of four £26 on a flight to Europe and £142 on one to the US. The government expects these changes should be clear to consumers, and will consult on making sure that the tax is displayed on ticket prices.
Currently, if someone passes away they can’t pass on their ISA to their spouse, even if they have saved the money together. 150,000 people a year lose out on the tax advantages of their partner’s ISA when their partner passes away. From 3 December 2014, if an ISA holder dies, they will be able to pass on their ISA benefits to their spouse or civil partner via an additional ISA allowance which they will be able to use from 6 April 2015. The surviving spouse or civil partner will be allowed to invest as much into their own ISA as their spouse used to have, in addition to their normal annual ISA limit.
The government is providing £2 billion of additional funding for frontline NHS services in England in 2015-16. This is part of a multi-year £3.1 billion UK-wide investment in the NHS. £1 billion will fund advanced care in GP practices over four years in England; this has come from fines collected by the Financial Conduct Authority from five banks for failures in foreign exchange trading. In England, at least £15 million will go to research in dementia, £150 million over five years will be invested to support young people with eating disorders. £200 million will go to develop new ways of caring for patients. £1.5 billion will go to local NHS services next year. A 0-2 year old early intervention pilot has also been announced to prevent avoidable problems later in life. The government will work with four pilot local authorities to draw on the success of the Troubled Families programme.
To support small businesses in local communities, the ‘high street discount’ for around 300,000 shops, pubs, cafes and restaurants will go up from £1,000 to £1,500, from April 2015 to March 2016. This is in addition to doubling Small Business Rate Relief for a further year which means 380,000 of the smallest businesses will pay no rates at all. The government will also continue to cap the annual increase in business rates at 2% from April 2015 to March 2016 – this will benefit all businesses paying business rates. Finally, the government will extend the transitional arrangements for smaller properties that would otherwise face significant bill increases due to the ending of ‘transitional rate relief’.
To make it cheaper to employ young people, from April 2016 employers will not have to pay National Insurance contributions (NICs) for all but the highest earning apprentices aged under 25. This is in addition to the announcement made at Autumn Statement last year that employers won’t have to pay NICs on under 21s from April 2015. These are part of the government’s wider ambition to have the highest employment rate in the G7.
From 2016-17, income-contingent loans will be available for postgraduate taught masters courses in any subject for those under the age of 30. The loans, of up to £10,000, will beat commercial rates. This will mean that more people will be able to take advantage of postgraduate courses, including those from low income backgrounds.
This will make sure the UK remains the best place in the world for science and research, and includes £95 million to take the lead in the next European mission to Mars. £235 million will also go on a new science research centre called the Sir Henry Royce Institute in Manchester and £20 million will go towards a research centre on ageing, in Newcastle.
This includes £15 billion on roads, nearly £6 billion funding for local road improvements, and over £2.3 billion towards over 1,400 flooding and coastal erosion protection schemes.
Currently some large multinational companies divert profits abroad through complicated business structures, such as the so-called ‘double Irish’, in order to avoid paying taxes. The government is introducing a new tax to counter this. The ‘diverted profits tax’ will apply to a company’s profits that have been diverted from the UK through complex arrangements such as these, and will apply to both UK and foreign multinational companies. So if a company conducts a lot of activity in the UK – sales, for example – but can avoid paying corporation tax by moving profits generated in the UK to other countries through the manipulation of the international tax rules, the UK will now be able to tax those profits at a rate of 25%. This will be introduced from April 2015.
Some banks made large losses during the financial crisis, and subsequent misconduct and the costs associated with mis-selling scandals. These losses are now being used by banks to eliminate corporation tax payments on current profits. It is unsustainable that some banks will not be making corporation tax payments for another 15 to 20 years. So from 1 April 2015, the government will therefore restrict the amount of banks’ profits that can be offset by carried forward losses to 50%, increasing their contribution to public finances through their tax payments.
Following on from the success of the film, high end TV, animation, video games and theatre tax reliefs, a new children’s TV tax relief will be introduced from April 2015. This will counteract a decline in investment in children’s TV in the last decade. Eligible companies will be able to claim 25% of qualifying production spending back through the relief. The government will also consult on introducing a new orchestra tax relief in April 2016.
This money will be spent on connecting up the North to create a powerhouse by investing £6 billion on roads to reduce jams, introducing new modern trains and 20% more capacity to end overcrowding, developing HS3 to make east-west travel faster, and doubling the number of northern cities to benefit from the government’s superfast broadband programme. Funding will also go on building the North’s strengths in science, with major new science investments across the North.
From 1 April 2015, search and rescue and air ambulance charities will be eligible for VAT refunds, in recognition of the vital role they play in providing support to the emergency services. The government will also meet the costs the hospice sector faces from VAT.
Following our 2014 Budget Presentation at The Dunkenhalgh Hotel our three YouTube star performers are:
Part One: John Green
Part Two: Anne Wilson
Part Three: Nadeem Hussain
The (as yet) unabridged content is below:
Filmed by Glasgows
The government is taking decisions that will support businesses to invest, export, and create jobs – laying the foundations for sustainable economic growth. This Budget sets out the most radical reforms to saving for a generation, providing security for families to plan for their future. And it reduces taxes for hardworking people, while taking further steps to tackle tax avoidance.
The government’s long-term economic plan has protected the economy through a period of uncertainty and provided the foundations for the recovery. The economy is now growing faster than predicted and expectations for growth this year and next have also been revised up by the Office for Budget Responsibilty (OBR) – to 2.7% in 2014 and 2.3% in 2015. A record number of people are in work and the OBR now expects employment to reach 31.4 million by 2018. A deficit that reached 11% of GDP in 2009-10 is now forecast to fallen by half to 5.5% in the coming year and will be eradicated by 2018-19.
However, as the Chancellor outlined in his speech the job is not yet done, and further difficult decisions will be needed to continue reducing the deficit and debt.
Striking a Balance
presented by Pierce Accountancy and Business Advisory Group.
On Wednesday 19 March the Chancellor will make his Budget Speech, on Friday 21 March our free breakfast event will cover the issues raised and highlight business and personal planning opportunities.
Join us for this free event, a delicious cooked breakfast and some serious analysis and advice followed by an excellent networking opportunity, you can’t afford to miss it.
On Friday 21 March at Mercure Dunkenhalgh Hotel & Spa
07.30am: Registration, networking and cooked breakfast (served until 8.10 am)
08.15am: Presentation will commence
09.15am: Presentation ends followed by question time
09.30am: Networking opportunity
10.00am: Seminar ends
To reserve your place and for directions, book online
or contact Mary-Lou on firstname.lastname@example.org
or 01254 688100. Book early to avoid disappointment.
Following the Chancellor’s Budget Speech on 20 March and our popular Budget Breakfast presentation on Friday 22 March we are pleased to publish copies of the presentations by guest speaker Harry Catherall, Chief Executive of Blackburn with Darwen Borough Council and Pierce tax experts Anne Wilson and Nadeem Hussain Continue reading
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