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Happy "New Tax" Year!,

13 January 2015

As we approach the end of another tax year, it’s time once again to plan for the next one.  To help you out, we’ve attached a tax calendar of some of the key tax deadlines you should be thinking about.

Also, the Chancellor announced a number of new tax rules in his Autumn Statement in December 2014 so we thought it would be a good idea to give you an update on these as well as some other recent changes.  A brief description of some of the main changes is given below.

Property Acquisitions

The good news is that the first £125,000 of any property acquisition will now always be free of any Stamp Duty Land Tax (SDLT).  Previously if you had bought a property worth £126,000 then you would have had to pay SDLT on the whole cost … but now only £1000 will be chargeable to SDLT.

In Scotland, from April 2015, a new Land & Buildings Transaction Tax will replace SDLT for residential properties, but it’s anticipated that this will work in a similar way to SDLT but with slightly different rates, starting at 0% for the first £145,000 of consideration.

Reform of Class 2 NIC

From April 2015 the liability of self employed individuals to pay Class 2 national insurance will no longer arise on a weekly basis but will instead be payable through the self assessment tax return at the end of each year, alongside the Class 4 NIC and income tax liability arising on the business profits.  The amount to pay will still be calculated by reference to the number of weeks the self employed business existed in the year.  The last Direct Debit for Class 2 NIC will be collected in July 2015.

Annual Tax on Enveloped Dwellings

From April 2015, the limit on the value of a residential property which you can own within a company without falling within the Annual Tax on Enveloped Dwellings rules will be £1m rather than £2m.  This means that there will a requirement for the company to prepare and submit an extra tax return and, if your company trade is not exempt from the tax, then you will also need to pay an additional annual tax charge – currently this is £15400 per annum on properties over £2m in value and £7000 on properties with a value range from £1m to £2m.

And it doesn't stop there - from April 2016 the limit is reducing to £500,000.  A nice little earner for HMRC.

Capital Gains Tax

Capital Gains Tax is to apply to non UK residents, both individuals and companies, disposing of residential property situated in the UK after 5 April 2015.  This ruling is still a matter subject to consultation so please contact us for specific advice.

Entrepreneurs' Relief

Two changes have been made to Entrepreneurs' Relief.  The first prevents individuals from claiming relief on the disposal of goodwill on incorporation into a company (effective from December 2014).  The second, expected in 2015, allows gains that would have been eligible for relief but are deferred into EIS or social investment tax relief to remain eligible for the relief when the gain is revived.

Capital Allowances

No further changes have been announced to the capital allowance regime.  However, it is worth remembering that the annual investment allowance limit of £500,000 per annum, introduced from April 2014, is expected to reduce (possibly to just £25,000 per annum) from 31 December 2015.

Other changes

  • The personal allowance will increase to £10,600 for 2015/16 rather than £10,500 as announced in last year’s Budget.
  • The personal tax basic rate band will be £31,785 for 2015/16 (so that individuals can earn £42,385 in total before paying tax at 40%).
  • From April 2015, a statutory exemption is to be introduced for trivial benefits in kind costing less than £50.
  • The £8,500 threshold below which employees currently do not pay tax on certain benefits in kind is to be removed from April 2016.
  • For 2015/16 the ISA limit will be increased to £15,240, with Junior ISA and Child Trust Fund limits increasing to £4,080.  From December 2014, when an individual dies leaving their ISA savings to their spouse, the ISA will now retain tax relief.
  • A number of new rules were introduced for the new pension flexibility regime effective from 6 April 2015, including confirmation of the abolition of the 55% special charge on death.
  • Corporation tax relief is no longer available on goodwill acquired when a business is acquired from a related individual or partnership (eg on incorporation).
  • A new corporation tax relief for the production of children’s TV programmes is expected to be enacted in Finance Bill 2015.
  • From 1 April 2015, the above –the-line research & development tax credit is to increase to 11% and the rate of enhanced deduction for small & medium companies is to increase to 230%.  However, the cost of materials incorporated into products that are sold will no longer be eligible for relief.
  • From 1 April 2015, businesses must account for VAT on the actual consideration received when prompt payment discounts are offered.
  • As previously announced, measures are to be introduced in Finance Bill 2015 to enable HMRC to recover tax and tax credit debts directly from bank accounts, building societies and ISAs.  However, there are now proposals to remove Scotland from these measures and to guarantee a face to face visit from HMRC for those who are affected.

As always, if you’d like to discuss any of the above or other ways in which we can help you reduce your tax bills, please contact or your usual Springfords advisor.

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