New tax year, new rules: changes to business and personal tax
With spring upon us and a new tax year just beginning, a number of previously announced changes are coming into force. These may affect your personal taxation or business concerns, so be sure you're up to date with the latest legislation. Here we provide an overview of some of the major changes for 2015/16…
Corporation tax for UK businesses has been reduced to 20%, a reduction of 1% on last year and a fall of 8% over the past five years. The UK now has the lowest rate of corporation tax in the G20 economies.
The Government has raised the business rates retail discount to £1,500 for shops, eateries and pubs with a rateable value of £50,000 or less.
In a further measure to narrow the tax gap - what the Government expects to receive in taxes each year and what it actually receives - the Diverted Profits Tax has been introduced with the aim of preventing multinational companies from shifting profits offshore.
In a bid to help reduce youth unemployment figures, employer national insurance contributions (NICs) have now been stopped for employees under the age of 21. Additionally, individuals who hire a care worker or support worker can now save up to £2,000 on their NIC bill via the Employment Allowance.
Meanwhile, the new Marriage Allowance aims to help four million married couples and 15,000 civil partners by allowing them to transfer part of their personal tax allowance. This means one partner can transfer up to £1,060 of their unused allowance to their partner, providing that partner has earnings within the basic income tax bracket.
Tax on savings interest has also been cut to 0% for savings up to £5,000. This is applicable to those individuals who earn less than £15,600 per year.
Individuals aged over 55 have been given new pension freedoms, allowing them more choice over what to do with their savings.
The changes allow those entering retirement - around 320,000 individuals per year - to cash in their pension pots instead of having to buy an annuity. While an annuity offers a monthly income for life, the freedom to choose has been described by Chancellor George Osborne as a 'permanent revolution'.
However, warnings have been issued to ensure pensioners do not fall foul of various pitfalls in the new system.
Many changes have taken place since the start of the 2015/16 tax year, and more are due to take place in the coming months. Be sure to check with us for the latest information.