Summer Budget 8 July
2015: Presentation at the
Verulam Golf Club on
10 July 2015
JAY DOSHI – VISIONARY ACCOUNTANTS – 01727 730 550
WWW.VISIONARYACCOUNTANTS.CO.UK
Disclaimer

These slides are for your general guidance only!
Please take all appropriate professional advice
as necessary. Neither the presenters/authors nor
the organisers accept any liability for any loss
suffered by anyone acting or refraining from
acting as a result of anything mentioned during
the presentations or as a result of anything
expressed in these notes.

e&oe.
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From the Chancellor’s Speech …

National Living Wage of over £9 an hour by 2020 …..
Government will run a surplus in 2019-20 ….. Reforming
the welfare system ….. 3 million new apprenticeships by
2020 funded by a levy on large employers ….. From
September 2017 30 hours of free childcare for 3 and 4
year olds ….. Student maintenance grants will be
replaced with loans from 2016-17 academic year …..
Road tax to be reformed and monies raised to be spent
on roads from 2020 ….. Extend the deadline for the first
MOT of new cars and motorcycles from 3 to 4 years …..
etc.
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Personal Tax etc.

Personal allowances: Increase from £10,600 (2015-16) to £11,000
(2016-17)

Higher rate threshold: Increase from £42,385 (2015-16) to £43,000
(2016-17)

Dividend Taxation: From April 2016 the notional 10% tax credit to be
abolished and a new “Dividend Tax Allowance” of £5,000/year to
be introduced and the new rates of tax on dividend income above
the allowance will be 7.5% for BR taxpayers, 32.5% for Higher Rate
taxpayers and 38.1% for the additional rate taxpayers

From April 2016 the “wear & tear” 10% allowance will be withdrawn
and to be replaced by deduction of actual cost of replacing
furnishings
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Personal tax etc … cont.

From April 2017: Tax relief on finance costs for buy-to-let properties to
be restricted and the restriction will be phased in over a four year
period starting from April 2017. Restriction will mean that tax relief will
be at BR only (see a later slide)

Rent-a-room relief to be increased from £4,250 to £7,500 from April
2016

Employer’s NI contributions ‘Employment Allowance’ to be
increased from the current £2,000 to £3,000 with effect from April
2016

Non-dom: From April 2017 if anyone is resident in the UK for > 15 yrs
of the past 20 yrs then he/she will be deemed domiciled for UK tax
purposes
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Personal tax etc … cont.

From April 2017 individuals born in the UK to parents who are
domiciled in the UK will no longer be able to claim non-dom status
whilst being UK resident

From April 2017 IHT will be payable on all UK residential properties
owned by non-doms (regardless of their residence status or structure
through which held – e.g., a offshore company or trust)

Deemed domicile rule for IHT will also change, from April 2017, so
that it is aligned with the above-mentioned 15 out of 20 years
(currently 17 out of the past 20 years)

Additional specialist personal tax resource for HMRC to tackle
serious non-compliance by trusts, pension schemes and non-doms
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Savings and pensions

Lifetime Allowance for pension contributions to be reduced from
£1.25m to £1m from April 2016. Transitional protection for pension
rights already over £1m will be introduced

The benefit of pensions tax relief for those with incomes (including
pension contributions) above £150,000 will be restricted by tapering
away the Annual Allowance (£40,000) with effect from April 2016
eventually to a minimum of £10,000

Lump sum death benefits where death occurs at age 75 or later will
be taxed, with effect from April 2016, not at the current 45% rate but
at the recipient’s marginal rate of tax
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Inheritance tax

Additional ‘nil rate band’ to be introduced when a residence is
passed on death to direct descendants. This will be £100,000 (201718), £125,000 (2018-19), £150,000 (2019-20) and £175,000 from April
2020

Any unused nil-rate band will be transferred to a surviving spouse or
civil partner

It will also be available when a person downsizes (or ceases to own
a home) on or after 8 July 2015 and assets of an equivalent value
(up to the additional nil-rate band) are passed on death to direct
descendants

Tapered withdrawal of the additional nil-rate band for estates with a
net value > £2m (withdrawal rate: £1 for every £2 over this threshold)
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Business tax

CT rate to be reduced from 20% to 19% from April 2017 and to 18%
from April 2020

Capital allowances – Annual Investment Allowance (AIA) to be
increased from £25,000 to £200,000 for all qualifying investments in
plant and machinery made on or after 1 January 2016

Goodwill amortisation/write-off will be restricted for any new
acquisitions/disposals made with effect from 8 July 2015 (see later
slide)

Loan relationships: Changes effective from accounting periods
commencing on or after 1 Jan 2016 with some exceptions (e.g.,
provision relieving credit which arise when debts are released etc
for companies in financial distress apply for releases/modifications
on or after the date of the Royal Assent to the Summer Finance Bill).
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Tax avoidance

Common Reporting Standard (i.e. a type of disclosure channel) –
Tax advisers and financial intermediaries will be notified by HMRC to
write to their clients about: the CRS, the penalties for evasion and
the opportunity to make a disclosure

Direct recovery of debts – tax and tax credit debts direct from
taxpayers bank account (including funds held in ISAs). There will be
a county court appeal process and a face-to-face meeting before
the taxpayer will be subject to the direct recovery method

Criminal investigations to increase

HMRC to obtain data from online intermediaries and electronic
payment providers from April 2016

Digital disclosure channel to make it easier to make a disclosure
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Tax avoidance … cont.

The ability for companies to use UK losses and reliefs against a
controlled foreign company (CFC) charge will be removed from 8
July 2015

Sums which arise to investment fund managers by way of carried
interest will be charged to the full rate of CGT with only limited
deductions being permitted

Inheritance tax – Counteraction measure to stop the use of pilot
trusts (typically used to gain advantage of multiple IHT nil rate bands
on ten year anniversary calculations for each trust).Generally
applying to new trusts created (or to old trusts where capital
additions are made) on or after 10 December 2014
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Restricting finance cost relief for
individual landlords

Finance costs include mortgage interest, interest on loans to buy
furnishings and fees incurred in relation to borrowing/repayment

2017-18: 25% of the finance costs will be relieved at BR and the rest
(75%) allowed fully

2018-19: 50% of the finance costs will be relieved at BR and the rest
(50%) allowed fully

2019-20: 75% of the finance costs will be relieved at BR and the rest
(25%) allowed fully

2020-21: 100% of the finance costs will be relieved at BR only
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EIS / SEIS

New investments will not qualify EIS unless the original investment
was already made under EIS/SEIS or Social Investment Tax Relief
(SITR)

New rule to prevent companies from using EIS/VCT funds to acquire
a business

Companies must first raise the monies under EIS/SEIS/SITR within 7
years of making the first commercial sale or 10 years if the company
is a ‘knowledge intensive company’ (i.e. basically research based
but there is a strict definition), unless the amount of the investment is
at least 50% of the company’s annual turnover averaged over the
previous 5 years. The age limit will also apply to any business that has
been owned previously by another company.
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Restriction of CT relief for business
goodwill amortisation

Applies to accounting periods beginning on or after 8 July 2015 but
not in respect of acquisitions made before 8 July 2015

Withdrawal of relief for goodwill and customer related intangible
asset acquisitions

If there is a disposal of goodwill (which falls under the new rules) on
or after 8 July 2015 then any additional relief (typically this would
arise if there is a loss on disposal) will be allowed as a ‘non-trading’
debit.

This measure will apply to all acquisitions made on or after 8 July
2015 unless made pursuant to an unconditional obligation entered
into before that date. It also applies to all goodwill created on or
after that date.
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Entrepreneurs’ relief – some recent
changes announced previously

Associated disposals – Assets used in the business but owned
personally – as long as the disposal is associated with the qualifying
disposal of the business / share in a partnership / qualifying
shareholding. The amount of the gain eligible for relief may be
restricted (so that only part of the gain then qualifies for relief).

From 18 March 2015 the associated disposal must be associated
with disposal of at least a 5% shareholding in the company or of at
least a 5% share in the assets of partnership carrying on business

If disposal is on or after 3 December 2014 to a close company and
you are a related party then gain on goodwill will not be eligible for
entrepreneurs’ relief. You are related to a close company if you or a
near family member are a participator in the close company
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Entrepreneurs’ Relief – trading
investment via another entity

With effect from 18 March 2015 claims to entrepreneurs’ relief in
respect of shares in certain companies which invest in joint venture
companies, or which are members of a partnership (LLP etc), are
denied where the investing company has no trade (or no relevant
trade) of its own!
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