New Tax Year – Round-up of Changes

Personal Tax
The tax-free personal allowance is now £10,600 (was £10,000) but remember employee NICs of 12% start at £8,060.
Higher rate tax starts at £42,385.
At £100,000 the £10,600 personal allowance is gradually reduced and completely taken away at £120,000—marginal tax rate is 60% in this band!

Capital Gains Tax
The new tax-free annual exempt amount is £11,100
If total income and capital gains are less than £42,385, CGT is 18% on gains; 28% on gains if total income and capital gains are over £42,385
Entrepreneurs relief continues to be available for sale of business shares or assets meaning an effective CGT rate of 10%.

CGT for non-residents selling residential property was introduced from 5 April 2015. This will apply only to any gain post– 5/4/15 therefore a valuation as at that date will be required as part of any sale process. The sale has to be notified to HMRC on a non-resident CGT return within 30 days of the exchange of contracts and also has to be included on a personal tax return even if no CGT is payable.

Corporation and Business Tax

From 1st April 2015 there is a single corporation tax rate of 20% for all companies regardless of profit levels.

The R&D tax credit has been increased to allow tax relief at 230% rather than 225% for SMEs

The Annual Investment Allowance on capital expenditure remains at £500,000 until 31/12/15.  We expect a reduction from January 2016 to be announced in the next Budget.

Transferable Marriage Allowance

This is a measure announced a while back that comes into force this April and merits a bit more explanation.

The transferable marriage allowance permits a spouse or a civil partner to transfer up to  £1,060  of their unused personal allowance to their partner.

To be eligible for this tax break, the donor has to be earning less than the personal allowance of £10,600 and the recipient must not be earning at levels over the basic rate of tax (£42,385).

Transferring the full allowance means a couple saves £212 tax.

The mechanism by which the allowance is transferred is by alterations to the partners’ tax codes.  One person in the couple has to register for this which can be done via the HMRC website.