The Chancellor has delivered his final Budget of this Parliament. Unsurprisingly, this was less of a Budget and more of a Party Political Broadcast, with just seven weeks to go until the General Election.
The biggest, but expected, tax giveaway was an increase in the personal allowance for 2016 and 2017. The allowance is, as previously announced, to increase to £10,600 in April 2015, rising to £10,800 in 2016 and £11,000 in 2017. If the government is re-elected they have made a commitment to raise the personal allowance to £12,500. This is good news for lower paid care sector workers who will end up with increased take home pay.
Employer’s National Insurance Contributions are to be abolished for employees under 21 from 1 April 2015 and for young apprentices from 2016.
Corporation tax, as already known, is to reduce to 20% from 1 April 2015 which is good news for care operators who operate through a company, rather than as a sole trader or partnership.
The Annual Investment Allowance limit (on which companies can claim 100% capital allowances for qualifying capital expenditure) is due to fall from £500,000 to £25,000 on 1 January 2016. The Chancellor announced this would be revisited in Autumn 2015, but that it would not fall as low as £25,000. Having been £50,000, £100,000 and £250,000 in the past, it is hard to predict what we will see next year, but care operators will need to plan the timing of their capital expenditure later in the year to ensure that allowances claimed can be maximised.
Capital Gains Tax Entrepreneurs’ Relief has been targeted again, this time to tighten the rules as to when an asset used in a business qualifies, and also to ensure individuals hold a 5% share directly in a trading company. Care operators will need to consider this and take professional advice when planning their exit strategy.
Then came the bombshell, the Chancellor announced that the tax return would be “abolished altogether”. A new, online system is to be introduced allowing individuals to manage their own tax affairs, and upload their own information. It remains to be seen as to how this will work in reality and tax payers will still need professional advice from their advisers in dealing with their personal tax matters.
Please click here to download our Tax Fact Card.
For further information, our Budget booklet and our comments can be found here.