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Summer Budget

Traditionally the first budget after a general election introduces some unpopular measures, as the Chancellor has nearly five years until the next election. Mr Osborne's plan to move the UK to a high wage, low tax and lower welfare economy can now proceed at full speed without the constraints of the coalition.

Here are some of the key points to the 2015 Summer Budget:

Income Tax

The personal allowance for 2016/2017 will increase from £10,600 to £11,000, with the basic rate band rising by £215 to £32,000.

Dividend Taxation

The current 10% dividend tax credit will be abolished from 6 April 2016 and a new £5,000 dividend allowance will be introduced. New rates of tax will apply above this limit, starting at 7.5% and rising to 32.5% and 38.1% for higher and additional rate tax payers.

Non-Domicile Status

From April 2017, anyone who has been resident in the UK for 15 of the previous 20 years will be deemed UK domicile. Also, individuals born in the UK to UK domiciled parents will no longer be able to claim non-domicile status while resident in the UK.

Pensions - Reduced Lifetime Allowance

Here we see another cut in the lifetime allowance, with a new £1 million allowance being introduced from 6 April 2016. We await the introduction of new transitional protections for those with pension savings around the £1 million mark, possibly via Individual Protection 2016 and Fix Protection 2016.

Pensions - Reduced Annual Allowance

As expected, from April 2016 higher earners will see a tapered reduction in their annual allowance. The rate of reduction is £1 for every £2 of the individual's adjusted income that exceeds £150,000.

Pensions - Input Periods

All pension input periods opened on 8 July 2015 will close with the next input period running 9 July 2015 to 5 April 2016. All subsequent periods will follow the tax year.

Inheritance Tax (IHT)

The current nil rate band £325,000 will be frozen until April 2021. The Chancellor has introduced a new main residence nil rate band, which is available when a main residence is passed down upon death to direct descendants. The additional allowance will start at £100,000 in 2017/2018.

Vehicle Excise Duty (VED)

There will be a new VED banding system introduced for cars registered after 31 March 2017, with the first year tax based on the vehicles emissions. Following this, VED will be a flat rate of £140 per year (except for 0 emission cars).

For more information about the changes and how they could impact on your financial planning objectives contact us to arrange a discussion.

Taking action now will be key to ensuring you have the means to achieve your goals and financial objectives. Our quality independent advice can help create the financial future you'd hoped for.

Read our Summer Budget Brochure »

Adam Caga