Vicky Platt MA FCA CTA Chartered Accountant and Chartered Tax Adviser SUMMARY FOR TAX YEAR 2014-2015 updated by the 2014 December Autumn Statement. The figures for 2015-2016 are in bold; 2014-2015 figures are not in bold (and often in brackets). RATES AND TAX ALLOWANCES FROM 6 APRIL 2014 2014/2015 (£) The Income Tax Rate bands and allowances are: Notes 2015/2016 5,000 2,880 0% (2014-15 10%) starting rate (restricted) on income up to 1 20% basic rate (if non savings taxable income exceeds the starting rate band 10% is not available) on income up to 40% higher rate on income up to (dividends 32.5%) 2 2 Withdrawal of personal allowance, which is reduced by £1 for every £2 income over £100,000, effective tax rate 60% 45% (45%) additional rate on the excess over [dividends 37.5% (37.5%)] Capital gains at individual's top rate of tax Capital gains tax annual exemption for individuals and executors/most other trusts Executors: Mainstream / Discretionary trusts: Basic rate band, no additional tax due Other income/dividends Personal allowance (born after 5 April 1948) progressively withdrawn on income over £100,000 (see above) Personal allowance (born 6 April 1938 – 5 April 1948) Personal allowance (born before 6 April 1938) Married couple allowance (if one born before 6 April 1935) Relief at 10% Minimum married couple’s allowance, one partner must be born before 6 April 1935 (Relief at 10%) 'Rent a room' relief applies to part let main residence 3 3 3 31,785 31,865 150,000 150,000 100,000 – 121,200 100,000 – 120,000 150,000 28% /18% 150,000 28% / 18% £11,100/£5,550 £11,000/£5,500 £1,000 45% / 37.5% £1,000 45% / 37.5% 10,600 10,000 10,600 10,500 10,600 10,660 8,355 8,165 3,220 4,250 3,140 4,250 1,050 Transferable tax allowance 4 Notes 1) Savings income, up to £5,000 (£2,880), primarily bank and building society interest, is taxed at 0% (10%), provided non savings taxable income does not exceed £5,000. 2) Basic rate savings income will continue to be taxed at 20% with dividends at 10%. Tax on taxable income above £31,785 (£31,865) 40% for savings income and 32.5% for dividends. Non savings income is taxed as the first slice of income. Dividends are taxed as the top slice of income. 3) The age allowance over the personal allowance is reduced by £1 for every £2 over the income limit of £27,700 (£27,000) to the standard personal allowance. This will reduce further if income is over £100,000 per annum. 4) Available to spouses/civil partners born after 5 April 1935 (for married couples civil partnership). Transferable if neither partner is a higher rate tax payer. NATIONAL INSURANCE CONTRIBUTIONS (NIC) Lower earnings limit ─ weekly pay over this gains state pension credits Earnings threshold ─ weekly employers’ / employees’ contributions Upper earnings limit ─ employees’ and self-employed, annual Contribution threshold ─ Class 4, self-employed, annual Contribution rate ─ primary threshold employee to upper limit Rate on earnings above upper limit ─ employees and self-employed Contribution rate ─ employer, secondary threshold, no upper limit Class 1A & B on benefits ─ employers’, no upper limit Employment allowance available to smaller employees against Employers’ NI * except for under 21s. Upper limit £815 per week. 2015/16 £112 £156/155 £42,385 £8,060 12% 2% 13.8% 13.8% £2,000 2014/15 £111 £153/£153 £41,865 £7,956 12% 2% 13.8% 13.8% £2,000 Self Employed: register within three months of starting self employment Class 4 NI is payable on 9% of profits between £8,060 (£7,956) and £42,385 (£41,385). For 2015/16 the 9% bill total is £3,089 (£3,052). 2% Class 4 is payable on all earnings above the upper limit of £42,385. Class 2, £2.75 (£2.70) per week. Class 4 and Class 2 contributions are now paid with tax bills. Small earnings exception can apply to Class 2 payments, if taxable profits are below £5,965 (£5,885). Contributions are not payable if you are of pensionable age at the start of tax year. State pension accrual of rights Earnings over the lower earnings limit £5,824 2015-16 gain credits for state pension. Up to 5 April 2016, 30 years’ credits required, then 35 years. The upper accrual point is £40,040. This will be abolished from 6 April 2016. INDIVIDUAL SAVINGS ACCOUNTS ‘ISA’, THE NEW ISA ‘NISA’, AND JUNIOR ISA ‘JISA’ FOR UK RESIDENTS Annual investment limit Maximum cash investment Junior ISA investment limit (under 18) 2015/2016 15,240 4,080 4,080 2014/2015 £15,000*/11,880 £15,000*/5,940 £4,000*/3,840 ISA income and gains are non taxable. 100% flexibility between cash and equities. Tax free exemption transfers on death of first spouse. INVESTMENT RELIEFS Enterprise Investment Schemes ‘EIS’ (can be carried back one tax year) Social Investment tax relief ‘SITR’ can attract hold-over relief SEED Enterprise Investment Schemes ‘SEIS’ (note (i) below) Community Investment Tax Relief ‘CITR’ Maximum pension contribution percentage of earned income (note (ii) below) Maximum pension contribution without earned income Lifetime limit for pensions savings Venture capital trusts ‘VCT’ Tax relief rate up to Gross 2014/2015 and 2015/2016 £1million @ 30% £1 million @ 30% £100,000 @ 50% rate no limit 25% over 5 years 100% up to £40,000 Marginal rate £3,600 £1,250,000 £200,000 @ 30% CGT Position 100% exempt 100% exempt if qualifying 100% exempt No exemption 100% exempt 100% exempt 100% exempt 100% exempt Note (i): EIS and SEIS can be related back one tax year. Only 50% of gain exempted 2013/14 onwards. Note (ii): Unused pension relief from earlier tax years may be available. COMPANIES AND CORPORATION TAX Year ending Small profits rate £0 to £300,000 Marginal rate £300,000 to £1.5 million Main rate, larger profits £1.5 million plus Notional tax credit on dividend Profits generated from patents are taxed at 10% from 1 April 2013. 31 March 2016 20% N/A 20% 10% 31 March 2015 20% 21% 21% 10% VAT RULES The VAT registration limit is currently £81,000 for any past 12 months' turnover (including all services and recharged expenses). For smaller businesses, which need to register for VAT, there are incentives to join the VAT Flat rate scheme. For more information look at www.hmrc.gov.uk, or discuss it with me. Cash accounting is available up to £1.35 million turnover. VAT filing for European sales Filing for EU sales and purchases must be done by a calendar quarter with deadlines of 21 days. CAPITAL ALLOWANCES FOR SMALL BUSINESSES (1 April applies to companies and 6 April to those who are self employed.) Annual Investment Allowance ‘AIA’ at 100% is increased from £250,000 to £500,000 on 16 April 2014 to 31 December 2015, then reducing to £25,000. Writing down allowances ‘WDA’ are allowed on unrelieved expenditure. The standard WDA rate is 18% and the lower WDA 8%. CARS, MILEAGE AND ALLOWANCES Rates on first 10,000 miles, 45p for all cars and for further mileage 25p a mile plus 5p per mile per passenger. Bicycle rate 20p a mile. Self-employed can, instead, claim non fuel expense and proportional capital allowances on the car based on percentage business use, plus a lower fuel rate of around 16p per mile. Volunteer workers with good records may claim work related mileage. MOTOR CARS – CO2 EMISSIONS AND ALLOWANCES Capital Allowances 2015/16 and 2014/15 from 1 April 2013 up to 95g/km to 31 March 2018 (110g/km) 100% from 1 April 2013 95g/km – 130g/km (110- 160g/km) 18% from 1 April 2013 > 130g/km (160g/km) 8% There is a £3,000 per car, per tax year, writing down allowance limit. For cars available by category see www.whatcar.com. ANNUAL STAFF PARTIES ─ The tax free limit is £150, VAT inclusive, per employee and also £150 for one guest per employee. All employees must be invited to attend. December 2014 VP 2014/Mailings/Autumn Statement 2014/Tax Rates and Allowances summary December 2014