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Personal Tax

  • The Personal Allowance will rise from the previously announced level of £1,600.00 (for those born after 5th April 1938) or £10,600 (for those born before 6th April 1938) to £10,800 for 2015-16
  • For 2016-17 the Personal Allowance will further increase to £11,000 for 2016-17
  • These rates will apply to all tax payers regardless of their dates of birth.

Basic Rate Income Tax

  • At the same time the basic rate limit will increase from £31,875 to £31,900 for 2015-16, and £32,300 for 2016-17

The Higher rate threshold

  • This will be the basic, higher and additional rates of tax for 2015-16

Rates of Tax

  • There is no change to the basic, higher and additional rates of tax for 2015-16
  • Personal Savings Allowance for Income Tax
  • The Government will introduce a personal savings allowance (PSA) from 6th April 2015
  • For basic rate tax payers the first £1,000.00 of savings income will be tax free
  • For higher rate tax payers the first £500.00 of savings income will be tax free
  • There will be no allowance for additional rate tax payers
  • The PSA is in addition to any ISA allowances
  • Banks and building Societies and other financial institutions will stop deducting 20% in income tax on interest from non-ISA savings with effect April 2016
  • Marriage Transferable Tax Allowance
  • For 2015-16 the allowance is £1,060
  • For 2016-17 the allowance will increase to £1,080
  • For 2017-18 the allowance will further increase to £1.100
  • ISA’s
  • Enable saver to withdraw and replace funds from their cash ISA without the replacement funds counting towards their annual ISA allowance (re-cycling). Regulations expected Autumn 2015
  • Introduce a Help to Buy ISA – The scheme will work by providing a government bonus to each person who has saved into a Help to But ISA at the point they use their savings to purchase their first home. For every £200 a first time saves, the government will provide a £50 bonus up to a maximum of £3,000 (on £12,000 savings)
  • With effect from 1st June the list of qualifying investments for ISA’s is to be extended – it is expected that the extension will include bonds issued by a co-operative and community benefit society and small to medium sized enterprise securities that are admitted to trading on a recognised stock exchange
  • Premium Savings Bonds
  • The maximum investment limit will increase to £50,000 on 1st June 2015

Pensions

  • The lifetime allowance is reduced from £1.25m to £1m
  • The annual allowance remains unchanged
  • From 6th April 2018 the lifetime allowance will be indexed, rising in line with the annual increase on the CPI
  • The new pension flexibility regime comes into effect whereby pension pots can be fully accessed
  • Individual’s already receiving income from an annuity will be able to take advantage of their own form of flexibility – they will be entitled to assign their income stream to a third party buyer in exchange for a lump sum or an alternative retirement product, provided the annuity provider agrees to the transaction. These measures are intended to come into effect April 2016
  • There will be nee rules on the tax treatment of death benefits to funds received by annuity holders who have made an assignment.
  • Digital Tax Accounts
  • The government will publish a road map in 2015 setting out proposed policy and administration changes to replace annual tax returns for individuals (and small businesses) with digital tax accounts
  • The government will also consult in the Summer of 2015 on a new payment process to allow income tax and national insurance to be collected outside the PAYE and self assessment tax return system
  • George Osborne has announced that information to allow HMRC to assess most individuals’ tax liability will be automatically uploaded into the new digital tax accounts
    This measure is intended to be introduced over the course of the next Parliament

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