Overview of main measures

Stephen Smith, Legal Director, CMS

Some of the measures announced this afternoon in the 2015 Summer Budget are as follows:

Corporation tax

  • corporation tax to be reduced to 19% in 2017 and 18% in 2020;
  • corporation tax instalment payment dates brought forward for businesses with profits of £20m;
  • annual investment allowance to settle at a permanent level of  £200,000 from 1 January 2016;
  • restrictions on amortising goodwill acquired after Budget Day;
  • restrictions on use of UK losses and reliefs against CFC charges;
  • a roadmap of changes proposed for business tax and administration to be published in April 2016;
  • new corporate debt anti-avoidance rules postponed until royal assent of the next finance bill;
  • 8% surcharge on bank profits but a reduction in the bank levy;

Income tax and capital gains tax

  • income tax personal allowance and higher rate threshold to increase slightly;
  • dividends exceeding a £5,000 annual allowance to be subject to effective marginal income tax rates of 7.5%, 32.5% and 38.1%;
  • buy-to-let landlords tax relief for interest limited to the basic rate of income tax;
  • non-dom status withdrawn from April 2017 for those resident in the UK for 15 of the last 20 years and those born in the UK;
  • the lifetime allowance for pension contributions reduced to £1 million from April 2016, the annual allowance for those earning £150,000 to taper from £40,000 to £10,000, and further consultation on wider reforms;
  • changes to ensure fund managers pay full rates of capital gains tax on carried interest, including abolishing “base cost shift”;
  • changes to EIS/VCT rules to ensure EU state aid compliance;

Inheritance tax

  • an additional £175,000 nil-rate band, to be phased in by 2020, to apply to homes left to children and grandchildren;
  • IHT to apply to UK residential property held through offshore structures by non-doms;
  • as above, non-dom status withdrawn for those born in the UK or who have been resident for 15 (currently 17) out of 20 years;

Avoidance and planning

  • financial advisers required to publicise the “common reporting standards” and related penalties and disclosure opportunities;
  • HMRC powers for direct recovery of tax debts to be increased but subject to safeguards;
  • further funding for investigations into evasion, non-compliance by small and mid-sized businesses, affluent individuals, trusts and non-doms;
  • individuals with net wealth of £10-£20m to get customer relationship managers;
  • consultation on requiring wealthy individuals and trustees to disclose more information to HMRC;
  • special measures to combat persistent aggressive planning and a voluntary “Code of Practice” of standards for large businesses.


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