George Osborne has delivered his seventh Budget, the first conservative budget in 19 years.
The Chancellor said;
"This is a budget that sets out a plan for Britain for the next five years to keep moving us from a low wage, high tax, high welfare economy; to the higher wage, lower tax, lower welfare country we intend to create."
Below is the Financial Management Centre’s summary of key points he has announced:
- Tax-free allowance of £5,000 for all taxpayers on dividend income. Dividends received above that amount will be taxed at 7.5%, 32.5% or 38.1%, depending on the individual’s tax band
- Introduction of new national living wage of £7.20 per hour for over 25’s from April 2016, rising to over £9 by 2020
- Employment Allowance to be increased from £2,000 to £3,000 from April 2016. Companies where the director is the sole employee will no longer be able to claim.
- Corporation tax rate will be cut to 19% in 2017 and 18% in 2020, affecting over 1 million businesses in the UK
- The Annual Investment Allowance will change to £200,000 from 1 January 2016 and become permanent
- Personal tax-free allowance rises to £11,000 from April 2016, a year ahead of the previous budget target
- The point at which people start to pay income tax at 40p will rise from £42,385 to £43,000 from April 2016
- Insurance Premium Tax to be increased from 6% to 9.5% in November 2015
- Inheritance tax threshold will be increased to £1m from 2017. A £175,000 transferable threshold for residential property passed to children and grandchildren will be phased in from 2017.
- ‘Non-dom’ tax status to be abolished from April 2017. Anyone who has lived in the UK for 15 of the past 20 years will pay same level of tax as other UK citizens
- Pensions tax allowance to be gradually reduced to £10,000 from the current £40,000 where income including pension contributions exceeds £150,000. This will start from April 2016
- New VED bands for new cars to be introduced from 2017, based on emissions . It is estimated 95% of car owners will pay a flat standard £140 a year. Zero-emission cars will continue to be exempt and cars with a list price over £40,000 will be subject to an additional £310 charge for the first five years
- 30 hours of free childcare for working parents of 3 and 4 year olds from September 2017
- Tax and Universal credits to be limited to families of up to 2 children from 2017
- Reduced tax relief for buy-to-let landlords. Mortgage interest relief on residential property to be restricted to the basic rate of income tax and will be phased in over a 4 year period starting April 2017
- Tax relief for homeowners who rent out a room to be increased from £4,250 to £7,500 from April 2016
If you have any concerns about how the Summer Budget may affect you and your business, contact your local TFMC office for further information