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The Budget Review 2015

By Matthew Oates of MJO Wealth Management

The Chancellor has delivered his Budget statement. He confirmed changes previously announced in the Autumn Statement and outlined a variety of measures in what was clearly a budget aimed at supporting those who work, save and invest.


Lifetime Allowance

The Chancellor proposed a reduction in the Lifetime Allowance to £1 million from 6 April 2016, which will then index in line with the Consumer Prices Index. There was explicit confirmation that the Annual Allowance will not change and there were no announcements affecting tax relief on pension contributions or on tax-free cash.


The Chancellor has announced more flexibility for Cash ISAs from this autumn. Under the proposed changes, investors will be able to withdraw and replace contributions made in a tax year, without compromising the Cash ISA subscription limit for that year.

A Help to Buy Cash ISA has been announced for first-time buyers and will provide benefits of up to £3,000 from the government. Up to £200 per month can be saved, plus an initial lump sum of up to £1,000. The government will top up those savings by 25%, subject to a maximum top-up of £3,000 on a subsequent property purchase. It will be available from autumn 2015.

Further announcements will follow regarding changes to the permitted investments within ISAs. We are also still awaiting further confirmation of the eligibility of transferring Child Trust Funds into Junior ISAs from 6 April 2015.

Personal Savings Allowance

From April 2016, the government will introduce a tax-free ‘Personal Savings Allowance’ of £1,000 (£500 for higher rate taxpayers) on the interest earned from savings.

Other key announcements

Income Tax Personal Allowances

The Income Tax Personal Allowance will increase to £10,800 from 6 April 2016, and £11,000 from 6 April 2017. The higher rate tax threshold will rise to £42,700 from 6 April 2016, rising to £43,300 from 6 April 2017.

The Income Tax personal allowance will increase to £10,600 in April 2015 and the higher rate tax threshold will increase to £42,385.

It was confirmed that the transferable Personal Allowance will be available from the new tax year.

The government has announced that the annual tax return will be abolished. It will be replaced by an online digital tax account.

It was also confirmed that Class 2 National Insurance contributions for the self-employed are to be abolished.

Inheritance Tax

Despite recent speculation regarding the Inheritance Tax nil-rate bands, there were no changes announced. However, the government will review the use of deeds of variation as a means of avoiding tax. This will be subject to further consultation in the autumn, and we will update you further when details are known.

VCTs and EISs

The government confirmed its previous announcement that companies investing in renewable energy will no longer qualify for relief under VCTs and EISs. There were some technical changes announced which will affect the eligibility of companies for VCT and EIS investment but no changes to the reliefs available, and no substantial changes for the investor.

Entrepreneurs’ Relief

There are proposed revisions to the entitlement of Entrepreneurs’ Relief under certain circumstances. We are working to understand how this ruling will be applied in practice, but it is largely in relation to individuals attempting to benefit from Entrepreneurs’ Relief without holding at least a 5% stake directly in a company carrying on a trade.

Tax avoidance

The government has reaffirmed its continuing commitment to tackle aggressive tax-avoidance schemes.

Tax year-end planning

Overall, nothing in the Budget reduces the need for careful consideration of how to structure your assets in a tax-efficient manner. With only a few weeks left in the current tax year, make sure you are maximising the opportunities, which exist.

Matthew Oates  DipFA – Principal of MJO Wealth Management Limited, Partner Practice of St James Place Wealth Management