The April Finance column from Mark Jones of Clay Shaw Butler
By Mark Jones, director of Clay Shaw Butler chartered accountants and business consultants, Lammas Street, Carmarthen
The Budget has included important tax simplification measures, a commitment to raise the investment allowance and a vital review of business rates.
The Chancellor’s commitment to raise the Annual Investment Allowance to an appropriate level will provide the certainty needed for businesses to plan and invest - something badly needed if the UK is to raise its productivity.
The abolition of Class 2 National Insurance contributions for the self employed is also a welcome step.
By early 2016, the Chancellor estimates all five million small businesses and the first 10 million individuals will have access to digital tax accounts.
Wisely, many will still want their accountant to advise – on what they can claim, how best to minimise payments, and how to take the business forward.
Tax-payers will now have a running picture of where they stand.
Most businesses simply want a fair system which is regularly updated.
Thankfully, the Chancellor has agreed that it needs far reaching reform.
The review into business rates is long overdue.
When complete, it must deliver tangible benefits to businesses and not end up as just another report that sits on the shelf.
The ‘state of the nation’ financial address was Chancellor George Osborne’s final Budget of the retiring Parliament.
In his speech the Chancellor reported 'on a Britain that is growing, creating jobs and paying its way'.
Towards the end of 2014 the Government issued many proposed clauses of Finance Bill 2015 together with updates on consultations.
Due to the dissolution of Parliament on March 30 some measures were legislated for in the week commencing March 23, whilst others will be enacted by a Finance Bill in the next Parliament (depending on the result of the General Election).
The Budget proposes further measures, some of which may only come to fruition if the Conservative Party is in power in the next Parliament.
At Clay Shaw Butler, we have produced a handy Budget summary for customers.
Our summary focuses on the issues likely to affect you, your family and your business.
To help you decipher what was announced we have included our own comments.
If you have any questions please do not hesitate to contact us for advice.
Our full Budget summary is on our website at –
Main Budget tax proposals
- Increased personal allowances
- The introduction of a new Personal Savings Allowance
- Changes to ISAs including the introduction of a new type of ISA for First Time Buyers
- Changes to pensions
- Entrepreneur's Relief - changes to qualifying conditions
The personal allowance for 2015/16
For those born after 5 April 1938 the personal allowance will be increased to £10,600. For those born before 6 April 1938 the personal allowance remains at £10,660. The reduction in the personal allowance for those with 'adjusted net income' over £100,000 will continue. The reduction is £1 for every £2 of income above £100,000. So for 2015/16 there is no personal allowance where adjusted net income exceeds £121,200.
Tax bands and rates for 2015/16
The basic rate of tax is currently 20%. The band of income taxable at this rate is being decreased from £31,865 to £31,785 so that the threshold at which the 40% band applies will rise from £41,865 to £42,385 for those who are entitled to the full basic personal allowance. The additional rate of tax of 45% is payable on taxable income above £150,000. Dividend income is taxed at 10% where it falls within the basic rate band and 32.5% where liable at the higher rate of tax. Where income exceeds £150,000, dividends are taxed at 37.5%.
Starting rate of tax for savings income
From 6 April 2015, the maximum amount of an eligible individual's savings income that can qualify for the starting rate of tax for savings will be increased from £2,880 to £5,000, and this starting rate will be reduced from 10% to 0%. These rates are not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income) exceeds the starting rate limit.
Corporation tax rates
From 1 April 2015 the main rate of corporation tax, currently 21%, will be reduced to 20%. As the small profits rate is already 20%, the need for this separate code of taxation disappears. The small profits rate will therefore be unified with the main rate. It is proposed that the rate of corporation tax will continue at 20% for the financial year beginning on 1 April 2016.
You can find out more about money matters on the new-look Clay Shaw Butler website (under or news for business section) -
We have a strong and experienced team with great local knowledge all geared-up to helping you get the very best from your finances – whether that is as an individual or as a business.
We stay ahead of the game by putting great store by continual professional development for our staff.
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The team at Clay Shaw Butler can be contacted on 01267 228500.
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