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Summer Budget Update

The Summer Budget was delivered on 8 July 2015, giving the Chancellor the opportunity to lay the tax foundations for the next five years whilst also making some surprise tax changes which will impact businesses and individuals alike.

  • Dividend income – From 6 April 2016, the taxation of dividend income will be altered significantly so that an actual tax charge (starting at 7.5% and rising to 38.1%) arises on receipts in excess of £5,000 per tax year, a complete overhaul of the current system;
  • Pension tax relief – From 6 April 2016, an individual earning in excess of £150,000 per tax year will have their annual allowance restricted on a sliding scale restricting gross contributions, for some, to £10,00 per tax year before incurring a charge;
  • Annual investment allowance (AIA) – From 1 January 2016, the AIA will be permanently set at £200,000 ensuring that businesses can continue to buy new plant and machinery and receive accelerated tax relief on qualifying capital expenditure;
  • Landlords and holding property personally – Commencing from 6 April 2017, the tax relief available on interest paid will eventually be restricted to 20% tax relief; and
  • Inheritance tax and the family home – Commencing from 6 April 2017, the much anticipated changes to extend the Nil Rate Band to £1,000,000, where the main residence is passed to direct descendents, were finally confirmed.

Whilst it is important to keep your tax affairs under regular review, the Summer Budget has created a number of new opportunities for current tax planning, for example, remuneration planning for the owner-managed business, restructuring property portfolios for higher rate taxpayers, the timing of personal pension contributions and IHT planning. 

Please contact Francesca on 01743 273273 or by email at fkh@whittinghamriddell.co.uk if you would like to discuss any of these in more detail.

 

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