HM Revenue & Customs

Tax Year 2015/16

Income Tax

Tax rates are:

0% between £0 and £10,600
20% between £10,600 and £42,385
40% between £42,385 and £150,000
45% above £150,000

Personal allowance:

£10,600 aged under 75
£10,660 aged 75 and over

Note 1 – where income exceeds £100,000 the personal allowance is reduced by £1 for every £2 of income above £100,000
Note 2 – from 6.4.15 married couples and civil partners will be able to transfer up to £1,060 of their personal allowance to their spouse where both people don’t pay above the 20% rate. Please use the following link if you would like to register for this www.gov.uk/marriage-allowance

National Insurance
Self-employed
Class 2’s £2.80 per week but can be exempt if profits below £5,965
Class 4’s 9% between £8,060 and £42,385
Class 4’s 2% above £42,385
Employees
Class 1’s 12% between £155 and £815 per week
Class 1’s 2% above £815 per week
Employers
Class 1’s 13.8% above £156 per week

Please note that self-employed class 2’s for 2015/16 will be paid in January 2017

Corporation Tax

From 1 April 2015 there will be a single rate of corporation tax of 20%

VAT

Compulsory registration if taxable supplies are above £82,000 within the previous 12 months. The de-registration threshold is £80,000
The flat rate scheme can be opted into where turnover is £150,000 or less and the scheme must be left if turnover goes above £230,000
The cash accounting scheme can be used where turnover is less than £1.35m and the scheme must be left if turnover goes above £1.6m

Capital Allowances

The annual investment allowance remains at £500,000 until 31.12.15. The chancellor will announce the new allowance in the autumn statement
Writing down allowances remain at 18%
There are special rules for cars:
Cars with CO2’s up to 75g/km                                       100%
Cars with CO2’s between 75g/km and 130g/km      18%
Cars with CO2’s above 130g/km                                   8%
For leased cars above 130g/km there is a 15% disallowance for tax

Capital Gains Tax

The annual allowance for individuals increases to £11,100 from 6.4.15
The CGT rates are as follows:
Where normal income + gains are less than £42,385              18%
Where normal income + gains are more than £42,385            28%
For sales of businesses up to £10m of lifetime gains                 10%

Inheritance Tax

The nil rate band of £325,000 (£650,000 for married couples and civil partners) remains the same. The rate of tax remains at 40%.

Just a reminder that from April 2014 the first £2,000 of employers NI is exempt. Directors of limited companies currently drawing salary at the NI threshold may benefit from increasing their salary. Please contact us for guidance.

The allowance will be claimed through the EPS as part of normal payroll procedures.

Income Tax and National Insurance – please see our pre-budget update.

Corporation Tax – from 1.4.14 the small companies rate remains at 20% (on the first £300k of profits). The large companies rate drops from 23% to 21% from 1.4.14, and 21% to 20% from 1.4.15. Large companies are those where profits exceed £1.5m. There are marginal rates of tax on profits between £300k and £1.5m.

VAT – from 1.4.14 the registration limit increases from £79k to £81k.

Capital Allowances – the annual investment allowance will increase from £250k to £500k in April 2014 but is planned to drop to £25k in January 2016. Writing down allowances remain at 18% (main rate including cars with 96-130g/km) and 8% (lower rate including cars over 130g/km). Cars up to 95g/km will attract 100% first year allowance.

Capital Gains Tax – the annual allowance for individuals increases to £11,000 from April 2014. The CGT rates remain the same at 18% (or 28% for gains above the basic rate band). The entrepreneurs relief rate stays at 10% for the sale of businesses for the first £10m of lifetime gains.

Inheritance Tax – the nil rate band of £325k (£650k for married couples and civil partners) remains the same. The rate of tax remains at 40%.

Business Mileage – rates remain the same at 45p/mile for the first 10,000 miles and 25p/mile on the excess.

ISA’s – from 1.7.14 the limit will be £15,000 per annum.

Pensions – from April 2015 individuals will not have to buy an annuity and will have freedom in how they access their pension pot.

Following the Autumn Statement and subsequent releases changes for the tax year 2014/15 have been outlined as below

National Insurance Contributions

Self-employed class 2 will be £2.75 per week

Self-employed class 4 will be payable between £7956 and £41865 at 9%, above £41865 the additional rate is payable at 2%

Employee’s class 1 is due between £153 to £805 per week at 12%, above £805 per week the additional rate is payable at 2%

Employer’s class 1 is due above £153 per week at 13.8%

Note: From April 2014 the first £2000 of employers NI is exempt from payment.

It has also been proposed that from April 15 employers will not have to pay the employer’s class 1 NICs on the wages of employees aged under 21 where the employee earns less than £813 per week.

Sick Pay Support

Currently employers can recover statutory sick pay (SSP) paid to employees where the total paid exceeds 13% of total class 1 NICs of the same month. This is to be abolished from 6 April 2014 therefore making SSP an unrecoverable cost for all employers.

Income Tax Allowances

The standard personal allowance will increase to £10,000

The personal allowance for those aged 65-74 will remain at £10,500

The personal allowance for those 75 and over will remain at £10,660

Note: The age related allowance will reduce to the standard allowance if total income exceeds £27,000.

The income tax bands will be as follows

Basic rate (20%) up to £31,865 (over personal allowance ie £41,865 in total)

Higher rate (40%) from £31,866 to £150,000

Additional rate (45%) over £150,000

Note: The personal allowance will again reduce where income exceeds £100,000

Married Couples Allowance

From April 2015 married couples and civil partners will be able to transfer up to £1000 of their personal allowance to their spouse but this can only be applied if both members of the couple are basic rate taxpayers or pay no tax in the year.

Capital Gains Tax

Where you sell a property that has at some point in time been your main home any gain on the period occupied is free from tax as is the the last 36 months of ownership. From 5 April 2014 any disposals made will only receive a final tax free period of 18 months.

Once the budget has been announced on the 19 March 2014 our normal update will be made with any revisions.

Please be aware of emails purporting to be from HMRC stating you are entitled to a tax refund.

HMRC do not advise any tax position by email so please be very cautious of any email of this nature.

HM Revenue & Customs has created 4 more tax investigation task forces including 2 based around the Midlands.

1 – Individuals living beyond their means

2- Anyone dealing in second hand cars

The latest minimum wage rates are as follows:

Age 16-17 £3.72 per hour

Age 18-20 £5.03 per hour

Age 21+ £6.31 per hour

Apprentice rate £2.68 per hour

The high income child benefit charge will be introduced from 7 January 2013.

The charge will apply if you or your partner have individual income of more than £50,000 and one of you receives child benefit payments.

The tax charge will then depend on the child benefit entitlement and the level of adjusted net income. If the adjusted net income is between £50,000 and £60,000 then the tax charge will be 1% of the child benefit for every £100 of income between these amounts. Above £60,000 the tax charge will be equal to the full amount of child benefit.

If you think you will be subject to the charge there are two options:

1) Keep receiving child benefit and pay the charge. You will need to complete a tax return and register for self-assessment if not already registered.

2) Opt to stop receiving child benefit. There would be no tax charge and no need to file a tax return (unless required for any other purpose).

For full details please refer to HM Revenue & Customs website via the following link

http://www.hmrc.gov.uk/childbenefitcharge/index.htm

Some key points following the Autumn Statement are as follows:

The annual investment allowance increases from £25,000 to £250,000 from 1.1.2013. This is the amount which attracts 100% tax relief in year one on expenditure on plant, machinery, equipment and commercial vehicles.

Small companies rate of corporation tax will remain at 20%.

The personal allowance increases from £8,105 to £9,440 from 6.4.2013. The basic rate limit will be £32,010 meaning higher rate tax will start at £41,450.

From 6.4.2013 employees will start paying National Insurance on earnings above £149 per week at a rate of 12%. Employers National Insurance will start on earnings above £148 per week at a rate of 13.8%. Self-employed class 2 NI increases from £2.65 to £2.70 per week and class 4 NI is payable at 9% on profits above £7,755.

The new NMW rates from 1.10.2012 are as follows:

16-17 years old – rate remains at £3.68 per hour

18-20 years old – rate remains at £4.98 per hour

21 years and above – rate increases to £6.19 per hour

Apprentices – rate increases to £2.65 per hour. For those aged under 19 and those over 19 but in the first year of apprenticeship.