Much of the content of the Chancellor’s speech had been already announced in the Government’s Autumn Statement in December 2014, but it was interesting to see that the existing Crown Dependencies disclosure facilities and Liechtenstein Disclosure Facility will close early to make room for a new disclosure facility on less generous terms.
Please see the HMRC website to download the 2015 Budget documents and our summary below of the key announcements made.
- The Government will introduce an allowance from 6 April 2016 to remove tax on up to £1,000 of savings income for basic rate (ie 20%) taxpayers and up to £500 for higher rate (ie 40%) taxpayers. Additional rate (i.e. 45%) taxpayers will not receive an allowance.
- For the tax years 2016/17 and 2017/18, the personal allowance will be increased to £10,800 and £11,000, respectively. The basic rate limit will be increased to £31,900 for 2016/17 and £32,300 for 2017/18. As a result, the higher rate threshold will be £42,700 in 2016/17 and £43,300 in 2017/18.
- From the tax year 2016/17, there will be one Income Tax personal allowance regardless of an individual’s date of birth.
- The National Insurance upper earnings and upper profits limits will increase to stay in line with the higher rate threshold.
- The Government will abolish Class 2 National Insurance Contributions in the next Parliament and will reform Class 4 to introduce a new contributory benefit test. The Government will consult on the detail and timing of these reforms later in 2015.
- The Government will “transform” the tax system over the next Parliament by introducing digital tax accounts to remove the need for individuals and small businesses to complete annual tax returns. Further details on the policy and administrative changes needed to deliver this will be published later in 2015.
- It was confirmed that legislation will be introduced in the Finance Bill 2015 next week for a new tax on diverted profits from 1st April 2015, as announced in the Autumn Statement.
- The Government will introduce legislation effective from 18 March 2015 to prevent companies from obtaining a tax advantage by entering into contrived arrangements to turn historic tax losses of restricted use into in-year deductions.
- In advance of a new disclosure opportunity, the terms of which are yet to be announced, the existing Liechtenstein disclosure facility will close at the end of 2015 instead of April 2016, and the existing Crown Dependencies’ disclosure facilities will close at the end of 2015 instead of September 2016. The new disclosure facility will run from 2016 to mid-2017.
- The Government announced that it will deal with inheritance tax avoidance through the use of deeds of variation, which are currently used to change a will after someone's death and enables the beneficiaries of a deceased's estate to alter the distribution of that estate.
- The Government will introduce tougher measures for “serial” tax avoiders, i.e. those who persistently enter into tax avoidance schemes which fail, including a special reporting requirement and a surcharge on those whose latest tax return is inaccurate as a result of a further failed avoidance scheme. The Government will also widen the current scope of the Promoters of Tax Avoidance Schemes regime by bringing in promoters whose schemes are regularly defeated by HMRC.
- The Government is also planning to introduce a penalty based on the amount of tax that applies to cases tackled by the General Anti-Abuse Rule. The details are expected to be included in the Finance Bill.
Should you have any queries regarding the above, please feel free to contact me or another member of our tax team.