TAX FACTS BUDGET 2015

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1 TAX FACTS BUDGET 2015 Key facts and figures at your fingertips for

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3 CONTENTS Personal Tax Income tax rates and allowances Pension provisions Giving to charity Capital gains tax Inheritance tax Investments Tax credits Timetable for Self Assessment Business Tax Corporation tax Corporation tax Self Assessment Capital allowances Research and development VAT and indirect tax Stamp Taxes Annual Tax on Enveloped Dwellings PAYE calendar for employers Car benefits National Insurance contributions Proposed changes from April The contents of this booklet are based on the information available from Government publications on Wednesday 18 March We accept no responsibility for any action which any individual or business may take based on their reading of this booklet. Please seek professional advice before taking action.

4 PERSONAL TAX Income Tax Rates and Allowances 0% starting rate for savings only * 10% starting rate for savings only * 20% basic rate ** 40% higher rate # 45% additional rate + * Taxable non-savings income causes 1 for 1 reduction in the amount taxed at the starting rate for savings. ** 10% rate applies to dividends. No tax liability on net dividend. # 32.5% rate applies to dividends. Tax liability is 25% of net dividend % rate applies to dividends. Tax liability is 30.6% of net dividend. Personal Allowance + Personal Allowance (date of birth to ) * Personal Allowance (date of birth before ) * Married Couple s Allowance *# Blind Person s Allowance Remittance basis users may not be entitled to the above allowances. + Every 2 of taxable income above 100,000 reduces the amount of the Personal Allowance by 1. * Every 2 of taxable income above 27,700 ( 27,000) reduces the amount of the Age Related Personal and Married Couple s Allowances by 1 until reduced to the standard Personal Allowance. Minimum Married Couple s Allowance 3,220 ( 3,140). # Allowance given at 10%. At least one spouse s date of birth must be before 6 April Remittance Basis Charge taxable income 5,000 up to 31,785 31, ,000 over 150,000 - taxable income - 2,880 up to 31,865 31, ,000 over 150,000 10,600 10,600 10,660 8,355 2,290 10,000 10,500 10,660 8,165 2,230 Resident in the UK in at least: 2 7 of the last 9 years 12 of the last 14 years 17 of the last 20 years 30,000 60,000 90,000 30,000 50,000 50,000

5 Pension Provision Maximum tax allowable contributions * Minimum tax allowable contributions Lifetime allowance maximum pension fund 40,000 3,600 1,250,000 Special rules attribute value to defined benefit (final salary) and other pension arrangements. * Contributions also limited to taxable earnings/trading income. + Annual limit increased by unused relief for three previous tax years. + 40,000 3,600 1,250,000 + State Retirement Pension Individual Additional: non contributor wife Age addition over 80 (each) Pension credit guarantee Individual Couple Per week Per week Giving to Charity Gift Aid Every 10 donation worth to a charity or a community amateur sports club. Taxpayers may elect to carry back to the previous tax year donations made by the date of submission of the tax return (deadline 31 January after the end of the tax year) for the purpose of higher and additional rate tax relief. Payroll Giving Employee or pensioner can request employer or pension payer to make deductions from gross pay. Amount of giving reduces income for tax purposes. Rent a Room Relief Income threshold gross receipts 4,250. 3

6 High Income Child Benefit Charge (HICBC) 4 HICBC paid by spouse/partner with higher income* if income exceeds Income above which HICBC is full amount of child benefit received # Capital Gains Tax (CGT) Exempt amount Rate on taxable amount Liable to income tax at higher or additional rate Others Remittance basis users may not be entitled to the exempt amount. Main exemptions No charge on:. Assets owned by an individual at death; beneficiaries acquire assets at market value at date of death;. Disposal of an individual s only or main residence provided all necessary conditions are met; Disposals of tangible moveable property with an expected life of less than 50 years; Disposal of tangible moveable property if proceeds are under 6,000; Foreign currency gains or losses on withdrawals from non-sterling bank accounts; or. Gifts of assets to charities. Indexation allowance Abolished for disposals after 5 April 2008 for individuals and trustees. Companies continue to receive indexation allowance. Entrepreneurs Relief 11,100 Individual 28% 18% 11,000 28% 18% 50,000 60,000 * Taxable income net of gift aid and allowable pension contributions, but not personal reliefs. # No HICBC if a person entitled to child benefit elects not to receive child benefit. Every 100 of income above 50,000 adds one percentage point to rate of HICBC. HICBC is charged on amount of child benefit received. 5,550 28% Trusts The first 10m of lifetime gains that qualify for relief charged to CGT at 10%. Gains in excess of 10m charged to CGT at normal rate as above. 50,000 60,000 5,500 28%

7 Inheritance Tax (IHT) Thresholds and rates Nil rate band for individuals *+ Thereafter - lifetime gifts to trusts ** Thereafter - on death # 325,000 20% 40% 325,000 20% 40% * Up to 650,000 for transfers on death by addition of any unused pre-deceased spouse s or civil partner s nil rate band. ** 40% for gifts made within 7 years of death, subject to tapering relief. # Where at least 10% of the net estate is left to charity, rate is reduced to 36%. + Frozen until 2017/18. Main exemptions Most transfers between individuals, if donor survives for 7 years. Gifts and bequests to charities. Transfers between spouses and civil partners, except where recipient is not domiciled in UK (in which case only 325,000 is exempt). Main lifetime exemptions Annual gifts per donor (if unused, one year carry forward) Small gifts per donee per annum Gift from parent on marriage or civil partnership Gift from grandparent or party to marriage or civil partnership Other gift on marriage or civil partnership Regular gifts out of surplus income 3, ,000 2,500 1,000 Unlimited Business Property Relief (BPR) Shares in unquoted companies Shares in quoted companies: - Shareholding up to 50% - Shareholding over 50% Unincorporated business 100% None 50% 100% 5

8 Individual Savings Account (ISA) Maximum contributions of which: - Investment into cash - Investment into shares - Joint cash and shares Junior ISA - Maximum contribution * 6 April April ,240 15,240 4,080 1 July April ,000 15,000 4,000 6 April June ,880 5,940 11,880 3,840 * Available for children under age 18 who do not have a child trust fund. Enterprise Investment Scheme (EIS) Maximum investment for income tax relief Rate of income tax relief * 1,000,000 30% 1,000,000 30% A claim may be made to carry back relief one year. Maximum investment limit does not apply where Capital Gains Tax (CGT) deferral relief is claimed. Disposals of EIS shares are exempt from CGT, other than where CGT deferral relief has been claimed. * * Shares must be held for at least 3 years. Seed Enterprise Investment Scheme (SEIS) Maximum investment for income tax relief Rate of income tax relief * Disposals of SEIS shares are exempt from CGT. * * Shares must be held for at least 3 years. 100,000 50% 100,000 50% Venture Capital Trusts (VCT) 6 Maximum investment for income tax relief Rate of income tax relief * Disposals of VCT shares are exempt from CGT. * Shares must be held for at least 5 years. 200,000 30% 200,000 30%

9 Social Investment Tax Relief (SITR) Maximum investment for income tax relief Rate of income tax relief 1,000,000 30% 1,000,000 30% Capital gains tax deferral is possible if a gain is reinvested in share or debt investments that also qualify for SITR income tax relief. Child Tax Credit and Working Tax Credit Child Tax Credit is paid to the main carer by HMRC, in addition to Child Benefit. Eligibility depends on the child s age and who is responsible for the child. Child Tax Credit Family element Child element Working Tax Credit Basic element Couple and lone parent element 30 hour element Maximum annual value ,780 2,750 1,960 1,940 2,010 1, Tax Credits and other means-tested benefits will be replaced by Universal Credit between April 2013 and Timetable for Self Assessment Date 31 July October October December January 2016 Event Second payment on account Deadline for notification of chargeability File paper return for for HMRC to calculate tax by 31 January 2016 File return for for a tax underpayment of less than 3,000 (up to 17,000 for employees earning over 90,000) to be collected via PAYE during 2016/17 File electronic return for Balancing payment for First payment on account for 7

10 BUSINESS TAX Corporation Tax - rates Main rate Small profits rate Lower limit* Effective marginal rate* Upper limit* Fraction 20% 20% N/A N/A N/A N/A 21% 20% 300, % 1,500,000 1/400 * As of 1 April 2015, the main rate of corporation tax will be reduced in line with the small profits rate, thereby eliminating marginal relief. Corporation Tax Patent Box profits Deduction in determining taxable trading profits: Percentage of relevant IP profits Deduction results in effective rate of corporation tax on patent box profits of 40% 12% 36.67% 13.3% The full benefit of the 10% effective rate will apply from 1 April Corporation Tax Self Assessment and quarterly payments Quarterly instalment payments apply to large companies (taxable profits of at least 1,500,000 p.a. reduced pro rata by the number of associated companies). Timetable for Corporation Tax Self Assessment and quarterly payments Due date From start of accounting period: 6 months & 13 days 9 months & 13 days 12 months & 13 days 15 months & 13 days 9 months & 1 day after the end of the accounting period Within 12 months of the end of the accounting period Event First quarterly payment date Second quarterly payment date Third quarterly payment date Fourth quarterly payment date Payment date for companies not in quarterly instalments regime Filing date for tax return 8

11 Capital allowances Plant & machinery: - Annual Investment Allowance (AIA) - main pool - special rate pool Patent rights and know-how - writing down allowance by reducing balance * Please note that this is currently under review and may change before 1 January Note: Note to (31/3/16) to (31/12/15) to (31/3/15) 1. Rate of AIA is 100%. Allowance is reduced on a Pro-rata basis for accounting periods shorter than a year. A single allowance can be applied to a group and allocated amongst members as desired. 2. Includes cars with CO 2 emissions between 75g/km (95g to ) and 130g/km. 3. Long life assets, integral features in buildings and cars with CO 2 emissions of over 130 g/km. 4. Intangibles acquired by unincorporated businesses and those acquired pre -1 April 2002 by companies. 5. Includes expenditure on cars acquired on or after 1 April 2013, with CO 2 emissions of no more than 75g/km (95g to ) excluding expenditure on cars acquired for leasing. 6. Expenditure incurred before 31 March 2017 on conversion or renovation of most business property situated in a disadvantaged area that has been unused for at least a year. From 11 April 2012 maximum relievable expenditure per project is 20m Environmentally beneficial or energy saving plant and equipment ,000 * 18% 8% 500,000 18% 8% 500,000 18% 8% 25% 25% 25% 100% 100% 100% Research & Development (R&D) 100% 100% 100% Business Premises Renovation Allowance (BPRA) 6 100% 100% 100% 9

12 Research and Development applicable to companies only Note Enhanced tax deduction for qualifying R&D expenditure: - Small and medium sized company (SME) scheme - Large company scheme SME scheme: rate of cash payment for surrender of loss attributable to R&D expenditure (as enhanced) Large company above the line taxable credit in respect of qualifying R&D expenditure % 130% 225% 130% 14.5% 14.5% 11% 10% Note: 1. Relief under the SME scheme capped at 7.5m per project. 2. Above the line is the default relief from 1 April However, in certain circumstances large companies can continue to claim under the enhanced deduction scheme for expenditure incurred up to 31 March Value Added Tax (VAT) Standard rate Fuel and power (domestic, residential, charitable) Conversion/repair of qualifying property Registration threshold from 1 April 2015 Deregistration threshold from 1 April 2015 Cash accounting upper limit from 1 April 2007 Annual accounting upper limit from 1 April 2006 Intrastat threshold for arrivals from 1 January 2015 Intrastat threshold for dispatches from 1 January % 5% 5% 82,000 80,000 1,350,000 1,350,000 1,500, ,000 10

13 Stamp Duty (SD) and Stamp Duty Reserve Tax (SDRT) Shares and convertible loan stock of UK registered companies 0.5% Stamp Duty Land Tax (SDLT) From 1 April 2015 SDLT no longer applies to property in Scotland. Wholly residential % Non-residential % 0 to 125, ,000 (Annual rent less than 1,000) 0 125,001 to 250, to 150,000 (Annual rent 1,000 or more) 250,001 to 925,000 5* 150,001 to 250, ,001 to 1,500,000 10* 250,001 to 500,000 3* Over 1,500,000 12* over 500,000 4* Each rate of duty applies on the part of the property price within each band. Leases: Premiums - as above but no nil rate band where annual rent 1,000 or more. Rent - 1% on net present value of rents above 125,000 (residential) or 150,000 (non-residential). * A rate of 15% applies for acquisitions by certain non-natural persons (e.g. companies) on a residential property over 500,000. Reliefs apply where certain conditions met. Land and Buildings Transaction Tax (LBTT) Each rate of duty applies to the whole price. From 1 April 2015 applies to property in Scotland in place of SDLT. Wholly residential % Non-residential % 0 to 145, , ,001 to 250, ,001 to 350, ,001 to 325,000 5 over 350, ,001 to 750, Over 750, Each rate of duty applies on the part of the property price within each band. Each rate of duty applies on the part of the property price within each band. Leases: Premiums - as above but no nil rate band where annual rent 1,000 or more. Rent - 1% on net present value of rents above 150,000. Residential leases are exempt unless term exceeds 175 years. 1 11

14 Annual Tax on Enveloped Dwellings (ATED) Charged on non-natural persons (e.g. companies) owning UK residential property valued over 1m. Reliefs apply where conditions are met. Property value Annual amount of tax payable 1,000,001-2,000,000 2,000,001-5,000,000 5,000,001-10,000,000 10,000,001-20,000,000 Over 20,000,000 7,000 23,350 54, , , ,400 35,900 71, ,750 Gain on disposal of a residence within ATED is liable to Capital Gains Tax (CGT). No indexation allowance; company pays CGT at 28%. From 1 April 2016 a 3,500 charge will apply for property with a value between 500,000 and 1m. Insurance Premium Tax Standard rate Higher rate 6% 20% 12

15 PAYE calendar for employers Monthly payments Electronic payment cleared funds in HMRC bank account no later than 22nd of month following end of tax month. Otherwise must reach HMRC by 19th of month following end of tax month. Quarterly payments Payments may be made quarterly where average monthly total of PAYE, NIC, student loan deductions and deductions from payments to subcontractors is less than 1,500. End of Year Procedure : 22 April 2015 Final date for electronic payment of PAYE & Class 1 NIC. 31 May 2015 Deadline for issuing P60s to employees. 6 July 2015 Filing date for P11Ds and P9Ds and providing employees with copies or details, and filing date for P11D(b). 19 July 2015 Payment date for Class 1A NIC due on benefits in kind. 22 July 2015 Payment date for Class 1A NIC due on benefits in kind, if paid electronically. 19 October 2015 Payment date for tax and Class 1B NIC due under a PAYE settlement agreement (PSA). 22 October 2015 Payment date for tax and Class 1B NIC due under a PSA, if paid electronically. Reporting PAYE in real time From 6 April 2013 employers have reported real time information (RTI) to HMRC, requiring electronic submission on or before date of payment to employee. 13

16 Car Benefits The taxable benefit in kind is a percentage of the car s list price according to the car s carbon dioxide emissions measured in grams per km and rounded down to the nearest 5g/km. The percentage for petrol cars is as set out in the table below. For cars that run solely on diesel, the percentage is increased by 3 percentage points, subject to a maximum of 37%. CO 2 emissions % of car s price to be taxed in g/km Less than Less than CO 2 emissions % of car s price to be taxed in g/km or more There are separate calculations and discounts for cars that run on alternative fuels and technologies. Fuel Benefit Taxable benefit in kind arises when any fuel is provided for private motoring in the tax year. Amount of the benefit is the percentage (for the car as determined above) of 22,100 ( : 21,700). HMRC mileage rates Tax-free rate per mile (cars and vans) Other vehicles per mile On first 10,000 miles On each mile over 10,000 45p 25p Motorcycles Bicycles In all cases, excess is taxable; relief is available on shortfall. 24p 20p 14

17 National Insurance Contributions From 6 April 2015 CLASS 1 - Employee Contributions Weekly earnings On first 155 Between 155 and 815 On excess above 815 Contracted in Nil 12% 2% Reduced rate for certain married women and widows: 5.85% on earnings between 155 and 815 per week. CLASS 1 - Employer Contributions Weekly earnings On first 156 On excess above 156 Contracted in Nil 13.8% Rebate when contracted out on earnings between per week is 1.4%/3.4% for employee/employer contributions respectively. Employment Allowance Annual reduction in Class 1 employer NIC 2,000. One employment allowance per group of companies. Excludes employment for some personal, household or domestic work, employers that are public authorities or carry out functions mainly of public nature. CLASS 1A and CLASS 1B - Employers only % CLASS 2 - Self-employed (profits over 5,965 pa) per week CLASS 3 - Voluntary per week CLASS 4 - Self-employed 9% on profits between 8,060 pa and 42,385 pa 2% on profits in excess of 42,385 pa. If also employed, and granted Class 2/4 deferment, no Class 2 due but 2% on all Class 4 profits over 8,060 pa. 15

18 PROPOSED CHANGES FROM APRIL 2016 Income tax. 20% basic rate limit - 31,900. Personal Allowance - 10,800. Personal Savings Allowance will exempt the first 1,000 of savings income from any tax for basic rate tax payers and the first 500 for higher rate tax payers.. Devolution to Scotland on Income Tax. Corporation tax. Devolution to Northern Ireland of the power to set rates of corporation tax.. Patent box - percentage of relevant IP profits deducted - 45%. Results in relevant IP profits being taxed at 11%. Other. Car Benefits - cars with less than 51g/km CO 2 emissions will increase to 7%. Those between 51g/km and 75g/km increase to 11%, all other bands increase by two percentage points, maximum will be 37%. There will be no diesel supplement to car benefit. The fuel benefit multiplier for cars and vans will increase by RPI.. Annual Tax on Enveloped Dwellings - residential properties with values over 500,000 from 1 April 2016 will become subject to ATED.. Lifetime allowance for pensions will be reduced to 1,000,

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20 Mazars LLP Mazars LLP is the UK firm of Mazars, an international advisory and accountancy organisation, and is a limited liability partnership registered in England with registered number OC A list of partners names is available for inspection at the firm s registered office, Tower Bridge House, St Katharine s Way, London E1W 1DD. Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www. auditregister.org.uk under reference number C