The biggest surprise in today’s Budget was that there were no surprises.
You’d think in an election year the Chancellor would have done something radical like last year’s “Pension Freedom” reforms.
In the days leading up to the Budget there were rumours that the personal allowance would be increased and maybe even the national insurance threshold. These turned out to be false. Yes, the personal allowance will go up to £11,000… but only in 2017.
[blockquote align=’right’]In the days leading up to the Budget there were rumours that the personal allowance would be increased and maybe even the national insurance threshold. These turned out to be false.[/blockquote]
There were nevertheless a few interesting announcements including a new £1,000 personal allowance for savings interest from next year (£500 for higher-rate taxpayers). The automatic deduction of 20% income tax by banks and building societies on non-ISA savings will cease from April 2016.
Another positive announcement was that individuals will be able to withdraw and replace money from their cash ISAs without it counting towards their annual ISA subscription limit, as long as the repayment is made in the same tax year as the withdrawal. The rules will be changed this autumn following technical consultation with ISA providers.
Another interesting announcement is the Help to Buy ISA. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum bonus of £3,000 on £12,000 of savings. These will be available from banks and building societies from Autumn 2015.
From April 2016 it will also be possible for retirees to sell their annuities in exchange for a lump sum. The proceeds of the sale will be taxed as and when they are withdrawn.
The Chancellor also announced that Class 2 national insurance contributions (£146 for 2015/16) will be abolished in the next Parliament. Many landlords have inadvertently paid this tax.
The other more mundane announcements include:
- The lifetime allowance for pensions will be reduced to £1 million from April 2016 but no other reductions to pension tax relief were made.
- From 1 April 2015 the VAT registration threshold will be increased from £81,000 to £82,000 and the de-registration threshold from £79,000 to £80,000.
- Landlord’ s energy saving allowance will be scrapped from 6 April 2015 as previously announced.
- From 6 April 2015 individuals who make loans through peer-to-peer (P2P) platforms will be able to offset bad debts arising against the interest they receive.
- Further tightening of the EIS and venture capital trust rules.
- The Government will review the use of deeds of variation for inheritance tax purposes
- In the Autumn Statement the annual investment allowance will probably not be reduced back to £25,000. A more generous rate will be announced.
Nick Braun is the founder of www.taxcafe.co.uk
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— LandlordZONE (@LandlordZONE) March 18, 2015