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The Autumn Budget Summary

by Scott Brown | Nov 25, 2015
  • On 25 November, George Osborne announced the revised Budget for the 2015-16 financial year and beyond. This is his eighth budget and it focused on putting both economic and national security first, bringing down national debt and becoming the most prosperous and secure nation in the developed world.
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    Here are some of the key points from the 2015 Autumn Budget as well as a few general reminders:

    Economy

    • The UK economy has been growing faster than other major economies since 2010
    • Growth for 2015 was forecast at 2.4%, followed by 2.4% in 2016, 2.5% in 2017, 2.4% in 2018 and 2.3% in 2019
    • Debt is lower at 82.5% of GDP for this year; it is expected to decrease further to 81.7% in 2016-17, 79.9% in 2017-18, 77.3% in 2018-19, 74.3% in 2019-20 and 71.3% in 2020-21
    • 1 million more jobs will be created over next five years
    • Apprenticeships doubled to 2 million and provisions for 3 million more have been made.  Funding for these schemes will largely come from employers via a 0.5% payroll levy on large firms (for companies with payrolls larger than £3m). This will come into effect from April 2017 
    • The deficit was 11.1% of national income in 2010. It is expected to be 3.9% this year, 2.5% in 2016-17, 1.2% in 2017-18 and 0.2% in 2018-19. A surplus is expected in 2019-20 of 0.5% then 0.6% by 2020-21
    • Public Sector net borrowing hit £73.5 billion this fiscal year. Looking forward, it is expected to be £49.9 billion in 2016-17, £24.8 billion in 2017-18 and £4.6 billion in 2018-19. A surplus of £10.1 billion has been predicted in 2019-20

    Personal Taxation

    • Personal Allowance increased to £11,000 from 2016 instead of 2017 and will increase with minimum wage. The 40% tax threshold was lifted to £43,000 up from £42,385 as of next year. The target is to eventually raise this to £50,000
    • Dividend tax system reform – as outlined in the Summer Budget, the 10% tax credit has been replaced with a £5,000 tax free allowance. Tax bands are set at 7.5% for basic rate, 32.5% for higher rate and 38.1% for additional rate tax payers from next year 
    • From September 2017, the government will extend the free childcare entitlement to 30 hours a week for working parents of three and four year olds who have an income of less than £100,000 and work more than 16 hours per week at the National Minimum Wage
    • When online tax accounts go live from 2019, Capital Gains Tax payments will be due within 30 days of a disposal of residential property
    • Second home and Buy-To-Let stamp duty will increase by 3% from 1 April 2016
    • The planned changes to tax credits have been abandoned; this will benefit low earners and working families
    • Housing and pension credit payments will cease for those who have left the country for more than one month
    • The London Help to Buy scheme aims to assist Londoners purchase newly built affordable properties with up to 40% equity loan interest free for five years, with just a 5% deposit required
    • Non-domiciled individuals born in the UK to non-domiciled parents no longer receive non-dom tax treatment
    • Permanent non-dom tax status has been abolished for those resident in the UK for 15 of the last 20 tax years from April 2017. The new rules will raise £1.5 billion for the Treasury
    • For residential property landlords deducting mortgage interest from rental profits, the relief from April 2016 will be restricted to the 20% tax band where the income is taxable at 40%. This is to be phased in over the next 4 tax years, starting in April 2017
    • Rent a room relief, currently at £4,250, will increase to £7,500 from next year; this is the first increase in 18 years
    • VCT and (S)EIS schemes to see changes to the excluded activities list. With effect from 30 November 2015, renewable energy and Reserve energy will no longer be qualifying activities 
    • Autumn 2016 to see debt securities, offered by crowdfunding platforms, made available for ISA investments
    • Planned clampdown on the use of Deeds of Variation postponed indefinitely 

    Businesses and Employers

    • Corporation Tax will be reduced to 19% in 2017, and further, to 18% by 2020-21
    • Tax relief restricted for travel and subsistence expenses for workers engaged through an intermediary or personal service company who fall within IR35 regulations
    • Online digital tax accounts will also apply to businesses by 2020. The system should go live for individual and small businesses in April 2016
    • Abolish uniform business rates, powers transferred to local councils including being able to cut them to boost growth
    • Small Business Rate Relief scheme has been extended by a further year
    • Auto enrolment increase deadlines to be moved back 6 months to coincide with the end of the tax year

    Pensions

    • There are now 5 million businesses providing work-based pension schemes under auto enrolment. The vast majority of small businesses will be required to enrol in 2016
    • State Pension is set to increase to £119.30 per week from next year
    • New Single Tier pension for new pensioners of £155.65 from next year 

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