George Osborne’s sixth Budget as the Coalition Chancellor was delivered on 18th March 2015. Here is a summary of announcements regarding income tax, capital gains tax, inheritance tax, pensions and annuities, annual tax on enveloped dwellings and disclosure facilities.
George Osborne’s sixth Budget as the Coalition Chancellor was delivered today, 18th March 2015.
Please note that there may be changes depending on who forms the Government after the General Election on 7th May.
The UK personal allowance remains available to both residents and non-residents, and will be £10,600 in 2015/2016, £10,800 in 2016/2017 and £11,000 in 2017/2018. The higher rate threshold will be £31,785 in 2015/2016, increasing to £31,900 in 2016/2017 and to £32,300 in 2017/2018.
The remittance basis charge for individuals resident in the UK for 12 out of the last 14 years will increase from £50,000 to £60,000, and a new charge of £90,000 will apply to those resident in the UK for 17 out of the last 20 years.
One of the more interesting features is that tax returns should become a thing of the past with new Digital Tax Accounts, whereby information for most people will be automatically collected. Further details will be published later in 2015.
The investment limit for Premium Bonds will increase to £50,000 from 1st June 2015. Please note that if you are not resident in the UK, premium bond winnings are likely to be taxable in your country of residence.
From autumn 2015, it will be possible to extract funds from an ISA and replace them in the same year, instead of losing that portion of ISA allowance for the year.
A new Personal Savings Allowance of £1,000 is to be introduced for basic rate taxpayers (£500 for higher rate taxpayers) from 6th April 2016.
A new type of Venture Capital Trust will be introduced in due course, in a future Finance Bill. Tax relief on investment in Social Venture Capital Trusts will be 30%, and the dividends received from or gains made on such investments will be tax-free.
Capital Gains Tax
Non-residents will be liable to UK capital gains tax on UK residential property from 6th April 2015 as previously announced. There is nothing new in the Budget about this, but although HMRC say that a property does not need to be valued as at that date, they do state that it is ‘sensible’ to do so. Our recommendation is that individuals who are non-UK resident (or may become so) have any UK property valued as at 5th April 2015 if possible.
It will no longer be possible to elect that a property is your main home for UK tax purposes if you are not resident in that jurisdiction, unless you spend at least 90 days in the property during that UK tax year. It is, however, important to note that this could impact an individual’s residence position.
Despite predicted changes to the Inheritance Tax Nil Rate Band, no change was announced and the rate will remain £325,000 until 2017/2018.
There will be a review regarding using Deeds of Variation to avoid inheritance tax. We await further information regarding this as it is announced.
In a future Finance Bill, there will be new rules to combat tax avoidance through the use of multiple trusts.
The Disclosure of Tax Avoidance Schemes (DOTAS) will be extended to cover Inheritance Tax Avoidance Schemes.
Pensions and Annuities
As announced last Friday, whilst it will be possible for individuals with certain pension schemes to take the full pension funds subject to their UK marginal tax rate, there will not be parity for QROPS schemes at the present time. This disparity is apparently ‘temporary’.
From 2016, individuals will be able to sell their annuities and pay only their marginal rate of income tax, instead of the current 55% tax.
From 6th April 2016, the lifetime allowance for pension contributions will reduce from £1.25 million to £1 million and will thereafter be indexed according to inflation.
Annual Tax on Enveloped Dwellings
As announced in the Autumn Statement, this will apply to properties worth in excess of £1 million from 1st April 2015. In addition, the bands for properties worth in excess of £2 million will increase by 50% above inflation from that date.
Both the Liechtenstein and Crown Dependencies Disclosure Facilities will close early at the end of 2015, rather than in April 2016 and September 2016 respectively. This is in advance of a new disclosure facility starting in 2016 and closing in mid-2017 in advance of the Common Reporting Standard coming into force in 2017.
18th March 2015
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.