Budget 2015 Presentation

Welcome

Peter Whalley

Partner

Our Manifesto – Top Three

• Multi-nationals and large corporates should pay fair share

•Diverted profits tax

•Contrived losses

•Criminal sanctions for tax evaders (and advisers)

• Low tax commitment

• Superfast broadband

•Ultra-fast broadband to all households

Survey Results Recap 2015

Last year we asked you ‘In March 2015,

what is your forecast for?’

CPI Inflation Rate

0 20 40 60 80

0 - 1.9 %

2 - 2.5 %

2.6 - 3 %

3.1 % +

Actual 2015 rate – 0.5%

Unemployment in the UK

Actual 1.9 million

Price of Petrol

0 8 15 23 30 38

Less than 124

125 - 129

130 - 134

135 - 139

140 - 144

145 - 149

150 +

Actual price – 109p

FTSE 100 Index

0

10

20

30

40

5,900 - 6,1006,101 - 6,3006,301 - 6,5006,501 - 6,7006,701 - 6,9006,901 - 7,1007,101 +

Actual – 6,945

Let’s hope we can do a bit

better this year!

We asked you ‘In March 2016, what is

your forecast for?’

CPI Inflation Rate (currently 0.5%)

0 25 50 75 100

0 - 1.9 %

2 - 2.5 %

2.6 - 3 %

3.1 % +

Unemployment in the UK (currently 1.9 million)

Price of Petrol (currently 109p)

0 10 20 30 40

Less than 100

101-110

111-120

121-130

131-140

141+

FTSE 100 Index (currently 6,945)

0

8

15

23

30

4,500 - 6,1006,101 - 6,3006,301 - 6,5006,501 - 6,7006,701 - 6,9006,901 - 7,1007,101 +

When do you expect the Bank of England base rate to increase from 0.5%?

Are you better off, worse off or about the same as one year ago and what

do you expect one year from now?

0 30 60 90 120 150

Worse off

Better

About the same

2015

2016

Are local businesses better off, worse off or about the same as one year ago

and what do you expect one year from now?

0 25 50 75 100 125

Worse off

Better off

About the same

2015

2016

If there was an in/out referendum now on EU

membership, how would you vote?

Which party or coalition do you expect to form the next government?

109

11

4

20

3

11

7

1

16

1

1

8

0 30 60 90 120

Cons

Lab

Cons/Lab

Cons/Lib

Cons/SNP

Lab/Lib

Cons + ????

Cons/Lib/????

Cons/UKIP

Cons/Green/UKIP

Lab/UKIP

Labour/SNP

Which team do you think will win the 2015 Rugby World Cup?

10

44

1 3 1 7 218

9

97

0

25

50

75

100

125

Australia England Europe France Germany Ireland Italy SouthAfrica

Wales NewZealand

UK Economy

• Growth for 2014 – 2.6% and set to continue

• Debt as % of GDP set to fall from 80% to 72%

• Borrowing of £97.5bn to turn to surplus by 2018/19

• Record employment – 5.3% jobless rate

• Trade deficit best for 15 years

• Living standards higher than 2010

• Householders ‘better off’ during last 5 years

• Inflation projection 0.2%

Debt Reduction

• More austerity

•£13bn savings in government departments

•£12bn of welfare savings

• Anti-tax avoidance measures - £5bn

• £13bn of mortgage sales from Northern Rock/Bradford & Bingley

• Sale of Lloyds Bank stake - £9bn

SNAP SURVEY

The Chancellor made a lot of reference to the great strides that the

country has made since his emergency budget in 2010

Looking back over your/your clients’ businesses over the last 5 years:

SNAP SURVEY

Have your/your clients’ revenues:

1. Increased

2. Decreased

3. Stayed the same?

SNAP SURVEY

Have your/your clients’ staff numbers:

1. Increased

2. Decreased

3. Stayed the same?

SNAP SURVEY

Have your/your clients’ appetite for investment:

1. Increased

2. Decreased

3. Stayed the same?

Alex Nicholson

Business Tax Director

“This budget does more to back business”

Corporation Tax

10

15

20

25

30

35

2007 2008 2009 2010 2011 2012 2013 2014 2015

Main Rate of corporation tax

Small company rate of corporation tax

Lowest rate in the G7 and joint lowest in the G20

Capital Allowances

• Annual Investment Allowance

• Currently £500k until 31 December 2015

• Was to reduce to £25k in 2016 - will be more generous

• Consider timing of capital expenditure

• No change to annual writing down allowances

R&D Tax Credits

• Changes announced in the Autumn Statement

• SME scheme rate increases from 225% to 230% from 1 April 2015

• “Above the Line” rate increases from 10% to 11% from 1 April 2015

• Package of measures to streamline the application process

As a reminder.....

• SME tax saving worth £46,000 for each £100,000 spent from April 2015

• Loss making SME £33,350 cash rebate for each £100,000 spent

• A valuable source of funding R&D

Patent Box II

• Much touted 10% Corporation Tax rate for profits falling within the

Patent Box

• EU probe cancelled

• But, current regime being phased out even before it’s fully phased in

• Patent Box II replacement – details awaited

Employment Taxes

• Employers’ National Insurance

• Abolished for under 21s from April 2015

• Abolished for apprentices aged under 25 from April 2016

• For the self-employed

• Class 2 NI to be abolished in next parliament (Class 4 NI remains)

Company Cars

• Tax charges based upon CO2 emissions

• What’s more tax efficient?

BMW i8 hybrid

List price £105k

Ford Mondeo 2.0D

List price £26k

BIK tax rate = 5%

Tax 40% = £174

pm

BIK tax rate = 23%

Tax 40% = £197

pm

Company Cars

• Emissions thresholds steadily reducing

• Announced well in advance

• 2019/20 – 3% increase in rates generally, but lower increases for

ultra low emissions vehicles

• Plan ahead when specifying company cars

Other Reliefs For Business

• Support for creative/media sector

• Increase in the rate of film tax relief to 25% for all qualifying

expenditure (not just the first £20m as previously proposed)

• New children’s television tax relief from April 2015 at 25%

• New orchestra tax relief from April 2016 at 25%

• Major review of business rates

VAT

• VAT registration threshold will increase on 1 April 2015 from £81,000

to £82,000. (Deregistration threshold will increase from £79,000 to

£80,000)

• VAT deductions relating to foreign branches

• Fuel VAT exemption for air ambulances and inshore rescue boats

Ian Miles

Private Client Tax Partner

The End of the Tax Return?

• Digital tax accounts to replace tax returns

• Commencing in 2016 with 15m, everyone (50m) by 2020

• Will bring together all tax information in one place

• Details of employment income, pensions and interest feed into tax

account

• Additional details to be added

• Can opt to file tax returns

• Can give access to tax agent

• Option to pay tax as you go

• Consultation later this year

Income Tax Rates and Allowances

• Personal allowance £10,000 2014/15

£10,600 2015/16

£10,800 2016/17

£11,000 2017/18• Transferable allowance between spouses to increase in line with the rising allowance

• Basic rate band £31,865 2014/15

£31,785 2015/16

£31,900 2016/17

£32,300 2017/18

Income Tax Rates and Allowances

• Full benefit of the personal allowance passed on to higher rate

taxpayers for the first year in 2017/18

• From 2016/17 there will be one personal allowance for all –

regardless of an individual’s age

• All individuals with income of £121,600 in 2016/17 and £122,000 in

2017/18 derive no benefit from increased personal allowance

Farmers’ Averaging

• Intense lobbying from stakeholders including National Farmers Union

• Widely fluctuating profits

• Current averaging period: 2 years of profits

• Consultation period to open, with outcome due April 2016

• Consulting with stakeholders to extend the averaging period to 5 years

Capital Gains Tax

• Annual allowance £11,000 in 2014/15 £11,100 in 2015/16

• Rates – no change at 18%/28%

• Entrepreneurs’ Relief: associated disposals

• Where selling personal assets used in a business, to qualify for

ER (10% CGT) the individual must also dispose of a minimum of

either:

•5% of company shares, or

•5% of partnership assets

Entrepreneurs’ Relief: Joint Ventures

• Clampdown on claims for ER for individuals who enter into a joint

venture, holding only a small stake in a trading company

• Individuals must have a significant stake in a genuine trading

business to benefit from the lower rate of tax

• Deny ER on disposal of shares in a company that is not a trading

company in its own right

The way you look you'll qualify for next year's old age pension!

Pensions

• Lifetime allowance £1.25m 2014/15 £1.25m 2015/16 £1m 2016/17

• Annual allowance – unchanged at £40k

• Transitional protection from 2016/17

• LA to be indexed annually in line with CPI from 6/4/18

• Annuities – from April 2016 people receiving an annuity can agree to

assign income to a third party in exchange for a lump sum or

alternative retirement product – taxed at marginal income tax rate

(not 55%)

Savings

• £1,000 of savings income tax free for basic rate taxpayers

• £500 of savings income tax free for higher rate taxpayers

• Basic rate deduction of tax on non ISA interest withdrawn from April

2016

• ISAs – can withdraw and replace capital in same tax year without

affecting annual ISA investment limits

• Help to buy ISA: First time buyers will receive £50 for every £200 of

savings up to a maximum of £3,000. Must be used to purchase first

home - restrictions on price - £450k in London, £250k elsewhere

Inheritance Tax

• No change to the Nil Rate Band which stands at £325,000

• Deeds of Variation

• Consultation on perceived tax avoidance

• Due Autumn 2015

• Generation skipping

• Effective use of NRB

• Will they remain allowable if there is no loss of tax?

Deeds of Variation

• Enables beneficiaries of a deceased’s estate to alter the distribution

of that estate

• 2 year limit after date of death

• IHT and CGT advantages, to write the gift back into the will

Deed of Variation - example

Husband WifePart of Estate

Spouse

exempt

Children

Chargeable

Deed of Variation - variation

Husband WifeEntire Estate

Spouse

exempt

Subsequent

gift - PET

Children

Charities

• Increase Gift Aid Small Donation Scheme to £8,000 from £5,000

• Means charities can reclaim £2,000 instead of £1,250

Peter Whalley

Partner

Household• Beer duty – down 1p

• Cider – down 2p

• Wines – frozen

• Spirits – down 2%

• Tobacco – 2% above RPI

• Fuel duty – frozen

SNAP SURVEY

Do you think that this budget will:

1. Increase business confidence

2. Undermine business confidence

3. Have no effect

SNAP SURVEY

Regardless of political party, who would make the best next Prime Minister?

1. David Cameron

2. Ed Miliband

3. David Miliband

4. Nick Clegg

5. Nigel Farage

6. Boris Johnson

7. Vince Cable

8. Natalie Bennett

9. Alex Salmond

10.Jeremy Clarkson (in the market for a new job apparently)

Thank you for

attending

58