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Budget Update; Rothmans gives regional businesses the inside edge

As you are aware, the Conservatives have been returned to Government with a majority and as expected have announced a second Budget which is to take place on 8 July. Rothmans will be issuing a second report picking up on the relevant points for your business but whilst we await the detail of their proposed measures, we are providing below a refresher from the March Budget. If you have not already done so, you may care to visit Rothmans website (www.rothmansllp.com) and sign up for the Firms’ eNews to receive topical and relevant information direct to your inbox.

CORPORATION TAX RATES ARE AS FOLLOWS:

 Financial year to

 31 March 2016

 31 March 2015

 Taxable profits

 

 

 First £300,000

 20%

 20%

 Next £1,200,000

 20%

 21.25%

 Over £1,500,000

 20%

 21%

Annual Investment Allowance (AIA)

The maximum amount of the AIA is currently £500,000 for all qualifying expenditure on plant and machinery made from 1 April 2014 for corporation tax and 6 April 2014 for income tax. After 31 December 2015 the limit was set to reduce to £25,000 but is now subject to further review. Transitional rules will apply.

Research and development (R&D)

The rate of the above the line credit will increase from 10% to 11% and the rate of the small and medium (SME) scheme will increase from 225% to 230%. These will take effect from 1 April 2015.

Film Tax Relief

The rate of film tax relief will increase to 25% for all qualifying core expenditure, for all eligible film productions. The distinction between limited budget films and all other will be removed. These changes will have effect on and after 1 April 2015 or the date of state aid approval, whichever is the later date.

High-end Television tax relief & animation tax relief

Subject to state aid clearance, the minimum UK expenditure requirements will be reduced from 25% to 10% for qualifying expenditure incurred on and after 1 April 2015.

Farmers Averaging

The period over which self-employed farmers can average their profits for income tax purposes is to be extended from two years to five. This measure will come into effect from 6 April 2016 following a consultation on the detailed design and implementation of the extension.

Changes to Employers NICs

From 6 April 2015 employers will no longer be required to pay Class 1 secondary NICs on earnings paid up to the upper secondary threshold to any employee under the age of 21. This will apply to both existing employees and new staff taken on by employers. No individual’s state pension entitlement will be affected by the measure. From April 2015 the £2,000 annual Employers Allowance for employer NICs will be extended to care and support workers. From April 2016 employer NICS up to the upper secondary threshold for apprentices aged under 25 will be abolished.

Abolition of Class 2 NICs

The Government announced its intention to abolish Class 2 NICs in the next Parliament and reform Class 4 NICs to introduce a new benefit test. The Government will consult on the details and timing of these reforms later in 2015.

Income Tax

2015/16

2014/15

Basic rate band – income up to

£31,785

£31,865

Starting rate for savings income

*0%

*10%

Basic rate

20%

20%

Dividend ordinary rate

10%

10%

Higher rate – income over

£31,785

£31,865

Higher rate

40%

40%

Dividend upper rate

32.5%

32.5%

Additional rate – income over

£150,000

£150,000

Additional rate

45%

45%

Dividend additional rate

37.5%

37.5%

Starting rate limit (savings income)

*£5,000

*£2,800

*If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate limit for savings will not be available for savings income.



Personal Allowance (PA)

2015/16

2014/15

Born after 5 April 1948

£10,600

£10,000

Born between 6 April 1938 and 5 April 1948

*£10,600

*£10,500

Born before 6 April 1938

*£10,660

*£10,660

Married Couple’s Allowance (MCA)

Either partner born before 6 April 1935 (relief restricted to 10%)

*£8,355

*£8,165

Transferable Tax Allowance

Higher rate

£1,060

-

*Allowances for those born before 6 April 1948 are reduced by £1 for every

£2 that adjusted net income exceeds £27,700 (£27,000) to a minimum PA of £10,600 (£10,000) to a minimum MCA of £3,220 (£3,140).

Where adjusted net income exceeds £100,000, PA is reduced in the same way until it is nil regardless of the individual’s date of birth.

The higher personal allowance for those born before 6 April 1938 will be removed with effect from 2016/17, so that everyone regardless of their age is entitled to the same personal allowance.

 

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