Budget 2015
How does the Budget affect Northern Ireland businesses?
The Chancellor, George Osborne, announced his Budget on Wednesday 18 March 2015. We have summarised the key points including the state of the economy, personal tax and savings from the Budget and highlight issues affecting Northern Ireland businesses.
Growth
Growth forecast for the next few years:
- 2.5% in 2015
- 2.3% in 2016
- 2.3% in 2017
- 2.3% in 2018
- 2.4% in 2019
Employment
Unemployment forecast to fall to 5.3% in 2015.
Government borrowing and debt
Borrowing set to fall and is due to be less than forecast at the previous Budget announcement:
- £90.2 billion in 2014-15
- £75.3 billion in 2015-16
- £39.4 billion in 2016-17
- £12.8 billion in 2017-18
Debt forecast:
- 80.2% in 2015-16
- 79.8% in 2016-17
- 74.8% in 2017-18
- 71.6% in 2018-19
Corporation Tax
Corporation Tax rate across the UK will be cut to 20 per cent from 1 April 2015.
Corporation Tax powers for Northern Ireland has moved a step closer with legislation passed in the House of Lords.
Income tax
The personal allowance will rise to:
- £10,600 from April 2015
- £10,800 from April 2016
- £11,000 from April 2017
The higher-rate threshold will rise in line with the personal allowance, taking it to £42,700 in 2016-17 and £43,000 in 2017-18.
Self employed taxes
The annual Self Assessment tax return is to be abolished and replaced by a new digital tax accounts system where the information HMRC needs will be automatically uploaded.
Class 2 National Insurance is also to be abolished.
Tax relief for creative industries
New orchestra tax relief to be introduced from April 2016 at a rate of 25 per cent. There will be an increase in the rate of film tax relief to 25 per cent for all qualifying expenditure and an extension of the high-end television tax relief by reducing the minimum UK expenditure requirement from 25 per cent to 10 per cent. A new children’s television tax relief will be introduced from April 2015 which will include children’s programmes that are game shows or competitions.
Extension of the Skills Investment Fund to provide £4 million to ensure that it can continue to match fund support for training and development in film, television, visual effects, video games and animation for a further two years.
A new Video Games Prototype Fund to be developed to aid access to finance and business support and to target games development talent.
Export
Doubling of funding for UK Trade & Investment (UKTI) to help businesses export to China.
Banking taxes
Bank Levy will be increased from 0.156% to 0.210% from 1 April 2015.
Compensation payments to be made non-deductible for Corporation Tax purposes through legislation in a future Finance Bill.
VAT
The government will no longer allow businesses to take account of foreign branches when calculating how much VAT on overhead costs they can reclaim in the UK.
National minimum wage
From October 2015 the national minimum wage will increase to £6.70 for an adult employee and to £3.30 for apprentices. New national minimum wage rates agreed.
Duties
- Beer duty will be cut by 1p from 23 March 2015
- Cider duty will be cut by 2%
- Spirits duty to be cut by 2%
- Wine duty will be frozen
- Fuel duty will also be frozen so that the planned increase for 1 September 2015 will be cancelled
The government will bring forward legislative proposals to replace the 1963 Horserace Betting Levy with a new Horserace Betting Right.
Savings
ISAs are being reformed so that savers can withdraw and replace money within the same tax year without counting towards the annual ISA subscription limit for that year.
From April 2016, a tax-free Personal Savings Allowance of £1,000 (or £500 for higher rate taxpayers) will be introduced for the interest that people earn on savings.
If they are a basic rate taxpayer and have a total income up to £42,700 a year, they will be eligible for the £1,000 tax-free savings allowance.
If they are a higher rate taxpayer and earn from £42,701 to £150,000, they’ll be eligible for a £500 tax-free savings allowance.
The Help to Buy ISA will provide a bonus of up to £3,000 to contribute towards a first home. This could help over 30,000 people in Northern Ireland to purchase their first home in the next 5 years.
Pensions
The lifetime allowance for pension contributions that benefit from tax relief will be reduced from £1.25 million to £1 million. This will be effective from 6 April 2016.
From April 2016 pensioners will be able to trade in their annuities for cash pots, with the 55 per cent tax charge abolished and tax applied at the marginal rate.
NI Executive
The Northern Ireland Executive will benefit from additional funding of £11 million through to 2015-16 as a result of Barnett consequentials.
Agriculture
Support for farmers by increasing the period over which they can average their profits for income tax from 2 to 5 years from April 2016.
Charities
Automatic gift aid increased for charities from £5,000 to £8,000.
Broadband
The broadband connection voucher scheme, extended at Autumn Statement 2014 to March 2016, will be available in a total of 50 cities by 1 April 2015.
