Personal allowance and basic rate limit 2016-17 and 2017-18. As announced at Budget, legislation will be introduced in Finance Bill 2015 to increase the income tax personal allowance to £10,800 for 2016-17 and £11,000 for 2017-18. The higher personal allowance for those born before 6 April 1938 will be removed with effect from 2016-17, so that everyone regardless of their age, is entitled to the same personal allowance.
The basic rate limit for 2016-17 and 2017-18 will increase by indexation so that most higher rate taxpayers will get the full benefit of the increases. Legislation will be introduced in Finance Bill 2015 to increase the basic rate limit to £31,900 for 2016-17 and £32,300 for 2017-18.
Taken together, these changes will increase the higher rate threshold above which individuals pay income tax at 40% to £42,700 for 2016-17 and £43,300 for 2017-18. A Tax Information and Impact Note for this measure is available at Annex A.
Van benefit charge for zero emission vans. As announced at Budget 2014, legislation will be introduced in Finance Bill 2015 to increase the current van benefit charge of £nil for vans which do not emit CO2 (zero emission vans), beginning in 2015-16. The van benefit charge for zero emission vans will be 20% of the value of the van benefit charge for vans which emit CO2 in 2015-16, 40% in 2016-17, 60% in 2017-18, 80% in 2018-19 and 90% in 2019-20. From 2020-21, there will be a single van benefit charge applying to all vans.
Statutory exemption for trivial benefits in kind. As announced at Autumn Statement 2014, legislation will be introduced in Finance Bill 2015 to provide a statutory exemption from tax for qualifying trivial benefits in kind (BiKs) costing £50 or less. Following technical consultation on the draft legislation, an annual cap of £300 will be introduced for office holders of close companies, and employees who are family members of those office holders. Those affected by this cap will be able to receive a maximum of £300 worth of trivial benefits in kind each year exempt from tax. Corresponding legislation will also be introduced for National Insurance contributions purposes. These changes will have effect from 6 April 2015.
Investment managers – disguised fee income. As announced at Autumn Statement 2014, legislation will be introduced in Finance Bill 2015 to ensure that all sums which arise to investment fund managers for their services are charged to income tax. It will affect sums which arise to managers who have entered into arrangements involving partnerships or other transparent vehicles, but not sums linked to performance, often described as carried interest, nor returns which are exclusively from investments by partners. Following consultation, the legislation has been revised to better reflect industry practice on performance related returns, to restrict the charge on non-UK residents to UK duties, and to ensure that the rules apply to investment trust managers. The changes will take effect in respect of sums arising on or after 6 April 2015, whenever the fund was set up or the arrangements were entered into.
Qualifying expenses payments – exemptions. As announced at Autumn Statement 2014, legislation will be introduced in Finance Bill 2015 to exempt from tax certain expenses payments and benefits in kind provided to employees. The legislation will apply where employees would have been eligible for tax relief if they had incurred and met the cost of the expenses or benefits themselves. This exemption replaces the rules that require employers to either apply to HMRC for an agreement known as a ‘dispensation’ so that they can provide expenses and benefits free of tax and National Insurance contributions, or to report such expenses and benefits to HMRC. However the exemption will not apply where expenses are paid as part of a salary sacrifice arrangement. Following consultation, the legislation has been revised ensure that the exemption cannot be used in conjunction with other arrangements that seek to replace salary with expenses. These changes will have effect from 6 April 2016.
Exemption from withholding tax for private placements. As announced at Autumn Statement 2014 legislation will be introduced in Finance Bill 2015 to enable regulations to be made providing an exemption from the duty to deduct income tax from interest paid on unlisted securities known as qualifying private placements. Following consultation, the primary legislation has been revised to remove a condition relating to the minimum term of the security. The power to make regulations will have effect from Royal Assent, and the regulations will be laid later in 2015.
Venture capital schemes – renewable energy. As announced at Autumn Statement 2014, legislation will be introduced in Finance Bill 2015 to exclude investments in companies that benefit substantially from subsidies for the generation of renewable energy from the tax-advantaged venture capital schemes, the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts (VCTs), from 6 April 2015, unless the company is a qualifying community energy organisation. Following consultation, the legislation has been revised to ensure that investments in companies receiving foreign subsidies similar to contracts for difference will be excluded from the schemes from 6 April 2015. As announced at Autumn Statement 2014 legislation will be introduced in Finance Bill 2015 to extend eligibility for social Investment Tax Relief (SITR) to qualifying community energy organisations. The annual investment limit of £5 million will apply to money raised under EIS, SEIS, VCTs and Social Investment Tax Relief (SITR). Budget 2015 announced the transitional provisions for community energy organisations moving from the tax-advantaged venture capital schemes to SITR. Provisions to exclude all community energy organisations from EIS, SEIS and VCT will take effect 6 months after the confirmation of state aid approval for the expansion of SITR. Qualifying community energy organisations will be able to use SITR from that date. Co-operatives and other non-qualifying organisations that benefit substantially from subsidies for the generation of renewable energy will no longer be eligible for tax-advantaged investment under the schemes once the transition period has elapsed.
Amendments to rules for Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT). As announced at Budget legislation will be introduced in Finance Bill 2015 to amend the rules for the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT).
Flood defence relief. As announced at Autumn Statement 2014, legislation will be introduced in Finance Bill 2015 to ensure that contributions by both companies and unincorporated businesses to partnership funding schemes for flood defences will be deductible for both income tax and corporation tax purposes. The legislation will apply to contributions made on or after 1 January 2015, and relief is available both for monetary contributions and for the cost of the contribution of services. Following consultation, the list of exceptions to what is a “disqualifying benefit” has been expanded.
Landlord’s energy saving allowance (LESA). LESA will not be extended beyond 31 March 2015 for corporate landlords or beyond 5 April 2015 or unincorporated landlords of let residential properties.
Capital allowances – connected parties sale and leaseback. As announced on 26 February 2015, legislation will be introduced in Finance Bill 2015 to clarify the effect of the capital allowances anti-avoidance rules for certain types of transactions. The legislation will be effective from 26 February 2015. A Tax Information and Impact Note for this measure is available at Annex A.
