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1. Personal tax
1.1 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.
1.2 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.
1.3 Personal allowances for non-residents
To ensure the UK personal allowance remains well targeted, the government intends to consult on whether and how the allowance could be restricted to UK residents and those living overseas who have strong economic connections in the UK, as is the case in many other countries, including most of the EU.
1.4 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 Budget. These changes will have effect from April 2015. Legislation will be in Finance Bill 2015.
1.5 Fuel Benefit Charge (FBC)
The FBC multipliers for both company cars and vans will increase in line with inflation for 2015 to 2016. The increase will be based on the September 2014 RPI figure.
1.6 Van Benefit Charge (VBC)
The VBC will increase in line with inflation for 2015 to 2016. The increase will be based on the September 2014 RPI figure.
1.7 Van Benefit Charge (VBC) support for zero emission vans
Legislation will be introduced in Finance Bill 2015 to extend VBC support for zero emission vans to 5 April 2020 on a tapered basis.
1.8 Company Car Tax (CCT)
The appropriate percentage of list price subject to tax will increase by 2% points for cars emitting more than 75 grammes of carbon dioxide per kilometre (gCO2/km), to a maximum of 37%, in 2017 to 2018 and 2018 to 2019.
1.9 National Insurance contributions: simplification for the self-employed
The government will introduce legislation when parliamentary time allows to simplify the administrative process for the self-employed by using Self Assessment to collect Class 2 National Insurance contributions alongside Income Tax and Class 4 National Insurance contributions. These changes will have effect from April 2016, however customers will start to see the benefits after April 2015.
2. Business tax
2.1 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.
2.2 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.
2.3 Enterprise Zones (EZ): Enhanced Capital Allowances (ECAs)
Legislation will be introduced in Finance Bill 2014 to extend the period in which 100% ECAs are available in EZs by 3 years until 31 March 2020, and to include a power to make future extensions to the duration of ECA schemes by Treasury Order. A pilot EZ will also be established in Northern Ireland. ECAs are available to companies investing in qualifying plant and machinery on designated sites within EZs. These changes will have effect from Royal Assent to Finance Bill 2014.
2.4 Enhanced Capital Allowances (ECA) for zero emission goods vehicles
The government will extend the ECA for zero emission goods vehicles to March/April 2018. However, to comply with EU State aid rules the availability of the ECA will be limited to businesses that do not claim the government’s Plug-in Van Grant. Legislation will be in Finance Bill 2015.
2.5 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.
2.6 Theatre tax relief
Legislation will be introduced during the passage of Finance Bill 2014 for a new Corporation Tax relief for theatrical productions and touring theatrical productions. The government will consult shortly after Budget 2014 on the design of the relief.
3. Property tax
3.1 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.
3.2 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.
4. Anti-avoidance, fairness and planning
4.1 Venture Capital Trusts (VCT) share premium accounts
Legislation will be introduced in Finance Bill 2014 to prevent VCTs returning capital subscribed by investors within 3 years of the end of the accounting period in which the shares were issued. These changes will have effect from 6 April 2014.
4.2 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.
4.3 Avoidance schemes involving the transfer of corporate profits
Legislation will be introduced in Finance Bill 2014 to prevent companies from obtaining a Corporation Tax advantage by transferring profits between companies within a group. The legislation will provide that where as part of tax avoidance arrangements a company transfers all or a significant part of its profits to another group member, then the company’s profits will be taxed as though the transfer had not occurred. These changes will have effect for any transfer of profits made on or after 19 March 2014.
4.4 Disclosure of Tax Avoidance Schemes (DOTAS)
The government will consult on extensions to the DOTAS ‘hallmarks’ (the descriptions of schemes required to be disclosed) to be introduced by secondary legislation later in 2014, and proposals to strengthen HMRC’s powers to tackle non-compliance with the rules, with a view to legislating in a future finance bill.
4.5 VAT Avoidance Disclosure Regulations (VADR)
The government will consult on proposals to improve the VAT Avoidance Disclosure Regulations (VADR) regime, including placing the obligation to disclose primarily on the scheme promoter. Legislation will be in a future finance bill.
4.6 Direct recovery of debts
Legislation will be introduced to allow HMRC to recover tax and tax credit debts of £1,000 or more directly from taxpayer accounts, subject to rigorous safeguards. The government will also consult on the draft primary and secondary legislation and on the implementation of the measure, including safeguards to prevent hardship. Legislation will be in Finance Bill 2015.
5. Indirect taxes
5.1 VAT: revalorisation of registration and deregistration thresholds
With effect from 1 April 2014:
- the taxable turnover threshold which determines whether a person must be registered for VAT, will be increased from £79,000 to £81,000
- the taxable turnover threshold which determines whether a person may apply for deregistration will be increased from £77,000 to £79,000
- the registration and deregistration threshold for relevant acquisitions from other EU Member States will also be increased from £79,000 to £81,000
The simplified reporting requirement (three line accounts) for the Income Tax Self Assessment return will continue to be aligned with the VAT registration threshold. From 2013 to 2014, small businesses are able to use the simpler Income Tax cash basis which simplifies the way in which small businesses can calculate their trade profits. The eligibility conditions for the cash basis are linked to the VAT registration threshold in place at the end of the relevant tax year.
5.2 Tobacco duty rates – effective from 6pm 19 March 2014
Legislation will be introduced in Finance Bill 2014 to increase the duty rates for all tobacco products by 2% above the rate of inflation (based on RPI) from 6pm on 19 March 2014. This will add 24 pence to the price of 20 cigarettes, 8 pence to the price of a pack of five small cigars, 23 pence to the price of a 25g pouch of hand-rolling tobacco, and 13 pence to the price of a 25g pouch of pipe tobacco.
The government will continue to increase all tobacco duties rates by 2% above the rate of inflation (based on RPI) for each year up to and including 2019 to 2020. These duty changes will be legislated for each year in the relevant finance bills.
5.3 Alcohol duty rates – effective from 24 March 2014
Legislation will be introduced in Finance Bill 2014 to reduce rates of beer duty by:
- 6% for low strength beer (less than 2.8% alcohol by volume (abv))
- 2% for the standard rate of beer duty (between 2.8% and 7.5% abv)
- 0.75% overall for high strength beer (above 7.5% abv)
These changes will reduce the price of a typical pint (at each strength) by one penny. The legislation will increase the duty rates for wine and made wine and sparkling cider of a strength exceeding 5.5% by the rate of inflation (based on RPI). This will add 8 pence to the price of higher strength sparkling cider and 6 pence to the price of a bottle of wine. These changes will take effect from 24 March 2014.
The duty rates on spirits and other cider and perry have been frozen.
5.4 Fuel duty rates – effective from 1 April 2015
Legislation will be introduced in Finance Bill 2015 to apply a reduced rate of fuel duty to methanol composed of 95% pure methanol and 5% water, to be implemented from 1 April 2015. The rate of fuel duty applied to methanol will be 9.32 pence per litre. The size of the duty differential between the main rate and methanol will be maintained until March 2024, and the government will review the impact of this incentive alongside the duty incentives for road fuel gases at Budget 2018.
5.5 Gaming duty – effective for accounting periods starting on or after 1 April 2014
Legislation will be introduced in Finance Bill 2014 to raise the Gross Gaming Yield (GGY) bandings for gaming duty in line with inflation (based on RPI). The revised GGY bandings used to calculate gaming duty must be used for accounting periods starting on or after 1 April 2014.
5.6 Bingo duty – effective for accounting periods beginning on or after 30 June 2014
Legislation will be introduced in Finance Bill 2014 to reduce the rate of bingo duty from 20% to 10%. In addition, the amendment to the bingo duty exemption provision, affecting adult gaming centres, simply updates the legislation and maintains the scope of the relief. The rate reduction will have effect for bingo duty accounting periods beginning on or after 30 June 2014. The amendment to the exemption provision will have effect from Royal Assent to Finance Bill 2014.
5.7 Machine games duty effective from 1 March 2015
Legislation will be introduced in Finance Bill 2014 to create a new rate of machine games duty that will apply in respect of machines where the charge payable for playing can exceed £5. The change will have effect from 1 March 2015.
5.8 Air Passenger Duty (APD): banding reform – effective from 1 April 2015
Legislation will be introduced in Finance Bill 2014 to reduce the number of APD destination bands from four to two, by merging the former bands B, C and D. It also sets the higher rates that apply to aircraft with an authorised take off weight of 20 tonnes or more, and fewer than 19 seats, to 6 times the reduced rate. These changes will have effect in relation to the carriage of chargeable passengers on and after 1 April 2015.
5.9 Landfill tax rates – effective from 1 April 2015
Legislation will be introduced in Finance Bill 2014 to increase the standard and lower rates of landfill tax in line with inflation (based on RPI) for disposals of waste made, or treated as made, to landfill on or after 1 April 2015.
5.10 Climate change levy (CCL) main rates – effective from 1 April 2015
Legislation will be introduced in Finance Bill 2014 to increase the main rates of CCL in line with inflation (based on RPI) from 1 April 2015.
5.11 Carbon price support (CPS) rates of climate change levy (CCL) effective from 1 April 2016
Legislation will be introduced in Finance Bill 2014 to set the CPS rates of CCL on fossils fuels (excluding oils) used in electricity generation from 1 April 2016. The legislation will also amend the previously legislated CPS rate on coal and other solid fossil fuels for 2014 to 2015 and 2015 to 2016.