The Budget delivered seven weeks before a general election, was always going to be subdued. Time will tell which measures survive the election, however whatever government we have by 7th May, there were some areas of particular interest.
Abolishing Deeds of Variation (or not) to assist in tax planning
It remains to be seen whether this announcement survives the election. The review is scheduled for Autumn 2015 so clients are well advised to act now if they are considering varying any provision in an estate post death.
New: Personal Savings Allowance (PSA)
This was a headline grabber. The PSA, due to take effect from 6 April 2016, will allow basic rate taxpayers to receive the first £1,000 of savings income free of tax, and higher rate tax payers £500. This could be a casualty of the election as it was not included in the pre-election Finance Bill published 24 March 2015.
Capital Gains Tax (CGT)
The ATED or Annual Tax on Enveloped Dwellings (broadly properties held in a corporate ‘envelope’) has been extended. As of 6 April 2015 it effectively makes these properties subject to CGT rather than Corporation Tax, extending CGT to properties held by non-UK residents for the first time. It is a complex provision and you should take advice if it affects you.
Individual Savings Accounts (ISAs)
A surviving spouse or civil partner can now effectively ‘inherit’ the value of their deceased spouse’s ISA allowance to add to their own. The biggest headline however was the proposed introduction of Help to Buy ISAs available from autumn 2015. Again one to watch after the election as this was not included in the Finance Bill.
The lifetime allowance will be reduced from £1.25m to £1m, the annual allowance will remain unchanged. Details of the flexible pension regime for those with defined contribution pension savings are still unpublished. Pension savers should keep a close eye on this legislation as it develops and seek advice before taking any significant steps.
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