How Budget 2015 affects business tax

Update to the Annual Investment Allowance

A welcome announcement from the Chancellor in relation to business investment in plant and machinery.

We had a temporary “annual investment allowance”(AIA) of £250,000 due to expire on 31 December 2014 but this period has now been extended to 31 December 2015 after which the amount will reduce back to £25,000. The chancellor said that he feels that the reduced figure of £25,000 would be totally unacceptable and that there will be a review of this with a view to announcing a higher figure in the autumn statement later this year.

Good news for creative industries

A further boost for creative companies, the chancellor announced that Film Tax Relief will be increased from 20% to 25%. He also announced that New Reliefs will be introduced for orchestras and Children’s TV Gameshows.

There is a small tweak to relief for High End TV Programmes reducing the minimum UK expenditure requirement from 25% to 10%. There is further funding of £8M targeted at the Video Games Industry, largely relating to matched funding for training etc.

An unexpected change to National Insurance

Rather unexpectedly, having only just brought Class 2 NIC’s within the Self Assessment tax calculations the chancellor has announced that during the next parliament there will be a review of NIC’s and as part of this Class 2 NIC’s will be abolished. Class 4 NIC’s will be replaced by some form of “Contributory Benefit Test”.

Capital Gains Tax (CGT) – Entrepeneur’s Relief (ER)

There are some new measures to close loopholes that some have been exploiting, these are unlikely to affect the vast majority of business owners. The main change concerns disposal of personal assets used in a business, meaningful withdrawal means a disposal of at least a 5% reduction in shareholding or partnership share.

Further crackdown on Tax Avoidance Schemes

Once again this featured in the budget speech, the main point to note being that HMRC will be increasing the number of “Accelerated Payment Letters” to those who have used Tax Avoidance schemes. This is further confirmation that those taxpayers who have used schemes with DOTAS requirements since 2004 can expect a demand for the disputed tax liabilities in the very near future if they haven’t already received them.

More on how Budget 2015 affects you…

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