The Conservatives now have another five years to push on with their economic and tax initiatives. Many voters had been eagerly awaiting the Summer Budget to see whether the Election promises would be honoured.

The tax measures have to be set against an economic background which has at its core the deficit reduction and further spending cuts. Material restrictions in benefits were announced alongside the tax changes and other measures.

Mr Osborne resisted the temptation to include material ‘sweeteners’ in his Spring Budget but promised that positive changes would be made if the Conservatives were voted in for a new term. In the Budget announcement he made repeated references to the promises he has now honoured.

The main tax announcements were:

  • ‘Tax lock’ legislation will be introduced later this year to put on a statutory footing the promised block on future tax increases.
  • A major change to the way in which dividends will be taxed from April 2016. This will potentially affect all those OMBs where dividends have been used to top up modest salaries.
  • A surprise reduction in the rate of Corporation Tax.
  • Inheritance Tax – a new ‘family home allowance’ of £175,000 per individual.
  • Radical reform of the tax treatment of non-domiciled individuals.
  • A phased reduction in tax relief on mortgage interest payments for buy to let landlords.
  • Income Tax – the planned increase in the personal allowance and the higher rate threshold.
  • Further moves on anti-avoidance with clear evidence that HMRC will be provided with the resources to push through such initiatives to maximum effect.

As with every Budget some of the measures will be introduced over time.

Click here to contact Simon Littlejohns.