From 6 April 2015 you won’t have to pay tax on interest received if your total income is less than £15,600.

As part of a wider relaxation for savers, the recent Budget pledged to introduce a Personal Savings Allowance (PSA) from 6 April 2016. The main features of the new PSA are:

1. If your taxable income is less than £42,700 the first £1,000 of your savings income will not be taxed.
2. If your taxable income is between £42,701 and £150,000 a year the first £500 of your savings income will not be taxed.
3. If your taxable income is over £150,000 a year you will not be eligible to claim the PAS and all your savings income (interest received) will be taxed.

At present, the banks (including building societies) deduct tax at 20% before they credit you with interest paid on your savings. In order to accommodate the new PAS, from 6 April 2016 these deductions will cease and interest will be paid gross, without deduction of tax.

Savers in receipt of significant interest receipts, and those paying income tax at the 40% or 45% rates, should take care to reserve part of their interest received to cover any income tax due; otherwise, what you receive from the banks after 6 April 2016 may create unexpected and unwelcome income bills…

 If you are a first time buyer a new savings scheme introduced in the Budget last week is well worth considering.

 Nick named the Help to Buy ISA, the ISA will allow you to save up to £200 a month, and if you fulfil the various conditions set out below, the Government will boost your savings by 25% when you purchase your first home. This is how it will work:

• new accounts will be available for 4 years, but once you have opened an account there’s no limit on how you long you can save for
• accounts will be available through banks and building societies from Autumn 2015
• you can make an initial deposit of £1,000 when you open the account – in addition to normal monthly savings there is no minimum monthly deposit – but you can save up to £200 a month
• accounts are limited to one per person rather than one per home – so those buying together can both receive a bonus
• only available to individuals who are 16 and over
• the bonus is available to first time buyers purchasing UK properties
• minimum bonus size of £400 per person
• maximum bonus size of £3,000 per person
• the bonus will be available on home purchases of up to £450,000 in London and up to £250,000 outside London

The Government bonus will be paid when you buy your first home.

 Major mobile networks have confirmed plans to introduce protection for consumers from huge bills run-up on stolen mobiles following Government action.

Under the voluntary agreement, five mobile networks – EE, O2, Three, Virgin Media and Vodafone – will protect around 27 million consumers on pay monthly contracts from being hit with shock bills through no fault of their own. They will all offer consumers a liability cap set at £100 when reported within 24 hours of being lost or stolen to the mobile network and police.

Ed Vaizey, Minister for the Digital Economy, said:

Protecting hardworking families from shock bills through no fault of their own has been a priority for this government. By working with the mobile operators, we have secured an agreement that will provide consumers with real benefits as well as offer peace of mind.

According to the National Mobile Phone Crime Unit (NMPCU) around 300,000 mobiles are reported stolen to the police each year in the UK.

Three has been the first mobile network to introduce this protection for its customers in January 2015. The other operators have now confirmed their plans:

• EE will introduce in the coming weeks;
• O2 will introduce the cap by September 2015;
• Virgin will introduce the cap from 1 July 2015; and
• Vodafone will introduce the cap this summer.

The protection comes as part of a new Code of Practice that all five mobile operators have signed up to. The code will also help protect consumers themselves from unexpectedly high bills and excessive costs from:

• Out of bundles charges – by providing clear and transparent pricing information, alerts when they reach data bundle limits or the ability to monitor usage.
• Roaming – providing information on how to turn off data roaming and avoid roaming charges.
• Premium Rate Services and in-app purchases – provide barring function so consumers can protect against unauthorised or inadvertently calls to premium rate voice services, and protections against in-app purchases.

The Chancellor has announced that the government will extend its pension freedoms to around 5 million people who have already bought an annuity.

From April 2016, the government will remove the restrictions on buying and selling existing annuities to allow pensioners to sell the income they receive from their annuity without unwinding the original annuity contract.

Pensioners will then have the freedom to use that capital as they want – just as those who reach retirement with a pension pot can do under the pension freedoms announced in Budget 2014. They can either take it as a lump sum, or place it into drawdown to use the proceeds more gradually.

The new flexibilities build on the radical reforms announced in last year’s Budget, and due to come into effect on 6 April, which allow people to make their own, informed choice about what they do with their savings in retirement. This could include being able to draw down from their defined contribution pension pots a bit at a time or taking their pension as a lump sum.

Chancellor of the Exchequer George Osborne has said:

“There are 5 million pensioners who are locked into annuities they have already bought. They should have the same freedoms as we have given everyone else.

For most people, sticking with that annuity is the right thing to do. But there will be some who would welcome being able to draw on that money as they choose – the same freedom we are offering those approaching retirement in April this year.

So I am going to change the law to let that happen, and make sure we have the right guidance in place.

People who’ve worked hard and saved hard all their lives should be trusted with their own pension.”

Currently people wanting to sell their annuity income to a willing buyer face a 55% tax charge, or up to 70% in some cases. The government will remove this charge, so people are taxed only at their marginal rate.

To ensure people are in a position to make an informed decision, the government will be working with the Financial Conduct Authority (FCA) to introduce appropriate guidance and other consumer protection measures.

For the great majority of customers, selling an annuity will not be the right decision. However individuals may want to sell an annuity for instance to provide a lump sum for relatives or dependants; pay off debts; in response to a change in circumstances for example getting divorced or remarried; or to purchase a more flexible pension income product instead.

On Wednesday, 18 March, the government will launch a consultation on the measures that are needed to establish a market to sell and buy annuities.

 Personal Tax and miscellaneous matters

 Personal Tax allowance

 The personal allowance for those born after 5 April 1948 will be increased to:

• For 2015-16 – £10,600
• For 2016-17 – £10,800
• For 2017-18 – £11,000

 From 2016-17, there will be one Income Tax personal allowance regardless of an individual’s date of birth.

 Income Tax rate bands

 There was significant press commentary prior to the Budget predicting an increase in the threshold at which tax payers are liable to the 40% Income Tax rate. The declared higher rate thresholds are:

• For 2015-16 – £42,385
• For 2016-17 – £42,700
• For 2017-18 – £43,300

 If your income before allowances exceeds these amounts you will be paying 40% Income Tax on the excess (this assumes that you are only entitled to the basic personal allowance).

 The threshold at which the 45% rate starts is unchanged at £150,000.

 There were no changes to the basic Income Tax rate (20%), the higher rate (40%) and the additional rate (45%).

 Personal savings allowance (PSA)

 From 6 April 2016, a PSA will apply to provide exemption of up to £1,000 of a basic rate taxpayer’s savings income, and up to £500 of a higher rate taxpayer’s savings income. The PSA will not be available to additional rate (45%) Income Tax payers.

 These benefits will be in addition to the tax advantages offered from ISAs.

 Annuity flexibility

 From April 2016 people who are drawing an annuity will be able to sell that income to a third party for a capital sum. The change will allow annuity holders to sell their annuities without punitive tax penalties of up to 70%.

 To prepare for this flexibility the Government has published a consultation to develop a secondary market in annuities.

 Pension’s lifetime allowance

 From 6 April 2016 the pension’s lifetime allowance will be reduced to £1m (currently £1.25m).

 Trivial benefits in kind

 From 6 April 2015 employee benefits costing £50 or less will be exempt for tax purposes.  An annual cap of £300 (of combined trivial benefits) will apply to office holders of close (smaller) companies and family members of those office holders.

 From the same date the £8,500 threshold for benefits in kind is abolished.

 Working tax credits (WTCs)

 In order to tighten the eligibility conditions for those claiming WTCs based on their status as a self-employed person, it will be necessary for claimants to demonstrate that their business is viable, or is working towards viability. The test will mirror the principles already set out in tax case law.

 Excise duties

 Alcohol duty is being reduced from 23 March 2015. This reduction will amount to:

• 1p off a typical pint of beer
• 18p off a typical bottle of spirits
• 1p off a typical litre of cider

 The duty rates on wine not exceeding 22% abv, and sparkling cider of a strength not exceeding 5.5% abv, have been frozen.

 Tobacco duty rates

 Duties are increased by 2% above the rate of inflation. The price of a pack of 20 cigarettes will increase by 16p.

 Vehicle excise duty 2015-16

 Rates for cars, vans and motorcycles will increase in line with the Retail Prices Index.

 Rates for heavy goods vehicles will be frozen.

 Transferrable allowances

 From April 2015 a spouse or civil partner, who is not a taxpayer, or who does not pay tax above the basic rate, will be entitled to transfer up to £1,060 of their personal allowance to their spouse or civil partner. This will not advantage higher rate tax payers as the recipient of the transfer cannot be subject to tax at higher than the basic rate. This could result in a saving of up to £212 for the recipient (20% of £1,060 in 2015-16). The limit will increase to £1,080 in 2016-17 and £1,100 in 2017-18.

Business Tax

 Corporation Tax rate

 The main rate of Corporation Tax from 1 April 2015 is 20%. The main rate and small company rate will be the same from this date dispensing with the need for marginal rate calculations.

 National Insurance for under 21s partially abolished

 From 6 April 2015 employers with employees under 21 years old will no longer have to pay Class 1 Secondary National Insurance Contributions (NICs) on earnings up to the Upper Secondary Threshold (UST) for those employees.

 The zero rate won’t apply to Class 1A or Class 1B NICs. Class 1 Secondary NICs will apply if the employee is earning above the UST.

 Capital Gains Tax – Entrepreneurs’ Relief (ER)

 Where this relief is linked to the disposal of privately held assets used in a business, to qualify for ER the disposal of these assets must be linked to a significant material disposal of the business. This is defined as at least a 5% shareholding in a company or of a 5% share in the assets of the partnership carrying on the business.

 Legislation is also being introduced to prevent claims for ER in respect of gains on shares in certain companies that invest in joint venture companies, or which are members of partnerships. This new provision will deny relief where the investing company has no trade of its own.

 Both these changes apply from 18 March 2015.

 Entrepreneurs’ Relief on disposal of goodwill

 ER is denied in respect of gains on business goodwill where the goodwill has been disposed of to a limited company which is related to the claimant. This change was introduced 3 December 2014 following the Autumn Statement.

 Following consultation, the legislation has been amended to allow ER to be claimed if the partners in a firm do not hold or acquire any stake in the successor company.

 Capital Gains Tax – wasting assets exemption

 From April 2015, the exemption for wasting assets will only be available where the qualifying assets have been used in the seller’s own business.

 Van benefits for zero emission vans

 From 2020-21 there will be a single benefit charge applying to all vans. This compares with the current £nil rate. The transitional steps will be:

• 2015-16 – 20%
• 2016-17 – 40%
• 2017-18 – 60%
• 2018-19 – 80%
• 2019-20 – 90%
• 2020-21 a single rate will apply with no reduction for zero emission vans.

 Farmer’s averaging of profits

 It is proposed that farmers will be able to average results for Income Tax purposes for up to 5 years, presently only 2 years, from April 2016.

  Flood defence relief

 Contributions made by companies and unincorporated businesses after 1 January 2015, to flood relief partnership funding schemes, will be deductible for both Corporation Tax and Income Tax purposes. The relief will apply to monetary contributions and for the cost of contributed services.

 Landlord’s energy saving allowance (LESA)

 LESA will not be extended beyond 31 March 2015, for corporate landlords, and 5 April 2015 for unincorporated landlords of let residential property.

 Bank loss relief restriction

 The proportion of a bank’s annual profits that can be offset by carried forward losses is to be restricted to 50%. Following consultations an allowance of £25m will be included for groups headed by a Building Society.

 Banks’ compensation payments

 Although no date was set for its implementation, the Government will consult on making customer compensation payments non-deductible for Corporation Tax purposes.

 Bank levy rate increase

 The bank levy is to be increased to 0.21% from 1 April 2015.

 Film, orchestra and television tax relief changes

1. High-end television tax relief: the minimum UK spend requirement reduced from 25% to 10%. Changes to the cultural test will also be made to bring them into line with similar changes to the film cultural test.
2. Children’s television tax relief: from 1 April 2015 producers of children’s television programmes, including game shows and competitions, will be able to benefit from tax relief.
3. Film tax relief: payable tax credits to increase to 25% for all films from 1 April 2015.
4. A new tax relief will be introduced for orchestras from 1 April 2016.

VAT registration and deregistration limits

 From 1 April 2015:

• Registration threshold increased from £81,000 to £82,000
• Deregistration threshold increased from £79,000 to £80,000

 VAT refunds for charities

 From 1 April 2015 charities that provide palliative care will be able to obtain a refund of the VAT they incur in providing these services and also in relation to their non-business activities.

 A similar scheme will be introduced for “blood-bike” charities to enable them to recover the VAT incurred on the purchase of goods and services.

 Gift Aid Small Donations Scheme

 From 6 April 2016 the maximum amount that can be claimed through the scheme will be increased to £8,000. This will allow Charities and Community Amateur Sports Clubs to claim a Gift Aid top up payment of up to £2,000 a year.

Savers and investors

ISAs – increased flexibility

 Regulations will be introduced in autumn 2015 to enable savers to withdraw and replace money in their cash ISA accounts without it counting towards their annual ISA subscription limit for that year.

 Help to Buy ISA

 In order to encourage and support first time house buyers to raise a deposit, the Government is to introduce a Help to Buy ISA from autumn 2015. The essential elements of the scheme are:

• Maximum monthly savings to an account will be set at £200.
• Maximum initial deposit will be £1,000.
• A Government bonus amounting to 25% of the amount saved will be added to the account when saver buys their first home. The maximum bonus will be £3,000 based on achieved savings of £12,000.
• The bonus is only available for the purchase of homes in the UK by first time buyers.
• Accounts can be opened for 4 years, but once opened you can save for as long as you like.
• The bonus is available on homes up to £450,000 in London or £250,000 elsewhere.
• Only available to persons who are 16 years or over.
• The accounts are open to individuals so a couple could have two accounts.

 The Chief Secretary to the Treasury, Danny Alexander, launched the most wide-ranging review of national business rates in a generation this month – paving the way for changes to how businesses across England pay the tax.

The review, set to report back by Budget 2016, will examine the structure of the current system which is paid annually on 1.8 million properties in England. The review will look at how businesses use property, what the UK can learn from other countries about local business taxes, and how we could modernise the system so it better reflects changes in the value of property.

The Chief Secretary launched the review during a speech to local businesses in Cambridge. He said:

“Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition. I’ve been impressed by the representations made by the business community and I know that business rates are a considerable cost.

The government has taken measures to help businesses by capping rates and introducing reliefs for smaller businesses. But now the time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective.

Today’s announcement follows the Government’s commitment in December 2014 to conduct a review of business rates and implement a £1 billion package to reduce the cost of business rates in 2015-16, with particular support for the smallest businesses and the high street.”

From the 1 April 2015 the government is:

• increasing help for the High Street: increasing the business rates discount for smaller retail premises with a rateable value of £50,000 of below to £1,500 to 31 March 2016 benefiting around 300,000 shops, pubs, cafes and restaurants
• doubling small business rate relief for a further year to 31 March 2016 to provide support for 575,000 of the smallest businesses, and ensuring 385,000 small businesses pay no rates at all
• capping the rise in the business rates multiplier at 2% to benefit all businesses
• extending transitional rate relief to support 16,000 small business facing significant bill increases due to the ending of transitional rate relief

Key facts about business rates:

• 1990 – National business rates system introduced
• business rates are paid by occupiers of non-domestic properties (e.g. shops, offices, warehouses, factories, guest houses)
• the main aim of business rates is to help raise revenue to pay for local services
• business rates are devolved within the UK
• business rates are paid on 1.8 million non-domestic properties in England each year
• £20.5 billion was brought in from business rates in England in 2013-14
• April 2013 – government introduced the ‘business rates retention scheme’ to allow local government in England to keep 50% of all business rates receipts and therefore 50% of any growth
• some properties are eligible for relief on their business rates (e.g. small business rate relief which has been doubled until March 2016)
• local councils send out business rate bills in February or March each year. The bill is for the following tax year. Some councils offer payment in 12 instalments

From 6 April 2015 married couples (and civil partners) will be able to register for the MA.

If your income is less than £10,600 in the 2015 to 2016 tax year, you may be able to reduce your husband, wife or civil partner’s tax by up to £212.

The new Marriage Allowance will let you transfer some of your Personal Allowance to your partner. This is the amount of income people can get before paying tax.

Who will be eligible?

You’ll be able to claim Marriage Allowance if all the following apply:

• you’re married or in a civil partnership
• you have an annual income of less than £10,600 – including pensions, savings and investments
• your spouse or civil partner has an annual income of between £10,601 and £42,385
• you were both born on or after 6 April 1935

If you or your partner were born before 6 April 1935, you may be able to claim Married Couple’s Allowance instead.

If both partners are paying tax at the 20% rate their personal allowance will be fully utilised against their own income and there will be no advantage making an MA claim.

The allowance will only benefit partnerships where one spouse has income below the tax personal allowance, presently £10,600 for 2015-16, and the other partner/spouse does not pay income tax at the 40% rate.

County Court Judgements and your credit rating

If you get a county court judgment (CCJ) or a high court judgment, it will stay on the Register of Judgments, Orders and Fines for 6 years.

For this six year period Banks and loan companies will be aware of the CCJ and will take this into account when deciding whether to give you credit or loans.

Get the CCJ removed if you pay within a month

If you pay the full amount within a month you can get the judgment removed from the register. You will need to contact the Courts to do this.

If you pay after a month

If you pay after a month, you can get the record of the judgment marked as ‘satisfied’ in the register. It will stay on the register for 6 years but people searching the register will see that you’ve paid.

In order to get the Court records amended to say you’ve paid you’ll need to send proof of payment, and pay a £15 court fee.

Search the register of judgments

You can search for details of any judgments against you on the register of judgments. http://www.trustonline.org.uk/index.php/search-yourself

You’ll have to pay a small fee – a simple search costs £4.

If the information on the register is wrong, you can contact Trust Online, who will check the details with the court.

Don’t bury your head in the sand

Your credit rating needs to be managed like any other aspect of your financial affairs. Use the Trust Online website to check your credit records and make sure that the information on file is correct.

If you receive a CCJ don’t bury the correspondence. Appeal against the judgement if you feel it is incorrect or make sure you make arrangements with the Court to pay what you owe as soon as possible.

There are a number of changes to the taxation of pensions from next month. We have copied into this article postings to the GOV.UK website regarding some of the more significant options available from April 2015.

 What happens to your pension when you die?

Instead of paying the 55% rate of tax when passing on their pension, people who die under 75 with defined contribution pensions can from April 2015 pass on their unused pension as a lump sum to a person of their choice tax free.

At the Autumn Statement 2014, the Chancellor also announced that from April 2015 payments from certain kinds of annuities that pay out income after you die (joint life and guaranteed annuities) will be tax-free when paid to a beneficiary, if the original policyholder dies below age 75.

For people who die over the age of 75 with unspent defined contribution pensions, they can pass this on to a person of their choice who will be able to take it as a lump sum taxed at 45% or as income and pay their normal rate of income tax.

Withdrawals from your pension

From April 2015, no matter how much you decide to take out from a defined contribution pension after retirement, withdrawals from your pension will be treated as income; the amount of tax you will pay on what you withdraw will depend on the amount of other income you have in that year, as long as you are 55 or over. . This is instead of being taxed 55% for full withdrawal, as it has been previously.

Most people will still be able to access 25% of their pot in one go without paying any tax.

When can you take advantage of the new pension withdrawals?

If you are over the age of 55, or will be from April 2015, you will be able to take advantage of the new system from then, subject to your pension scheme rules.

If you’re younger than 55 then you will be able to take advantage of the new system when you reach normal minimum pension age under the tax rules (this is currently age 55).

If you are over the age of 55, or will be from April 2015, you will be able to take advantage of the new system from then, subject to your pension scheme rules.

If you’re younger than 55 then you will be able to take advantage of the new system when you reach normal minimum pension age under the tax rules (this is currently age 55).

Before making any decisions on your pension pot you should take proper advice.

Pension providers or schemes will be required to tell people about the guidance service in the information they send to people when they are approaching retirement. This guidance will be available through a number of different channels – via the internet, over the phone, or face to face at a Citizens Advice Bureau.

It will be entirely impartial, so won’t be given by anyone who could be trying to sell you a product.

In a recent speech Business Minister, Matthew Hancock, announced that the government-backed Prompt Payment Code will now promote 30-day terms as standard, with a 60-day maximum limit. Unless signatories can prove exceptional circumstances for longer terms, they will be removed from the Code.

The change will be rigorously enforced by the new Code Compliance Board, which will include people from business representative bodies who will investigate challenges made against signatories to the Code by their suppliers. The Compliance Board will remove signatories found to be in breach of the Code’s principles and standards.

The Prompt Payment Code sets out fair and agreed practices for businesses to follow when dealing with, and paying, their suppliers. More than 1,700 businesses and public authorities have so far committed to these principles, which include paying suppliers within an agreed timeframe and communicating with them effectively.

Business Minister Matthew Hancock said:

“Making small businesses wait an unreasonable time for payment is entirely unacceptable. I know first-hand the great burden that late payment can place on firms – and how it can strain family finances – which is why I am committed to stopping it.

Big companies should lead by example and pay small suppliers within 30 days. I have already written to the FTSE 350 urging them to sign up to the Prompt Payment Code.

Fairer payment practices will help small businesses grow and create jobs. This is a key part of our long-term economic plan to build a better Britain.”

Businesses will be actively encouraged to start complying with the strengthened Prompt Payment Code in the coming weeks. The changes complement the tougher reporting laws in the Small Business, Enterprise and Employment Bill. These new laws will force the UK’s largest companies to publish their payment terms, increasing transparency and empowering small businesses. The Code Compliance Board will be able to use this data to review the status of signatories to the Code and challenge those that either do not pay their suppliers promptly or insist on excessively long standard terms.

The Prompt Payment Code is a voluntary Code to drive a change in payment culture. It is administered by the CICM on behalf of BIS. More information about the Code can be found at Prompt Payment Code website.