Darren Grimes outlines the key tax changes in Budget 2015
George Osborne presented his pre-election Budget speech today and there were largely no surprises.
There was expected to be a Conservative “giveaway” to charm the voters at the election, and despite the Chancellor emphasising that the benefits of increased growth, high employment and deficit reductions would not be squandered on tax cuts, he did announce increases to both the personal allowance and the higher rate threshold for income tax purposes. Over the next two years, the personal allowance will increase from £10,600 to £11,000 with in an increase in the higher rate threshold from £42,385 to £43,300. Therefore, not only will those on lower incomes benefit, but the “squeezed middle” will not miss out either.
For businesses, it was disappointing that the Chancellor didn’t announce any increase to the Annual Investment Allowance (currently due to fall to £25,000 from 1 January next year), however he did say that this would be covered in the Autumn Statement. More generally for companies, corporation tax rates will fall to 20% from 1 April 2015, which is one of the lowest rates amongst the top 10 world economies.
One of the more interesting announcements related to the “abolition of tax returns” from 2020. What this appears to mean in practice is that new “digital tax accounts” will be created for those currently completing self assessment returns. It is expected that businesses’ accounting systems and, more crucially, banking systems will be linked directly to HM Revenue and Customs online to provide “real-time” tax information, thus abolishing the need for tax returns. It will interesting to see how this works in practice, particularly for those with more complex tax affairs, not to mention the security concerns over linking accounting/banking records directly to HMRC.
There were also some specific announcements around tax anti-avoidance with new penalties being introduced for evaders and avoiders and their advisers. In total, anti-avoidance and evasion measures are expected to raise £3.1 billion.
Throw in reductions in tax for the oil industry, incentives for the creative industries and in increase in the bank levy – and you have the 2015 Budget.