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BUDGET

8 JULY 2015

page 3

PERSONAL TAXATION

Income tax – personal allowances and basic rate band

The personal allowance for 2016/17 will rise from £10,600 to

£11,000 and the basic rate band will rise by £215 to £32,000.

From 2017/18 the personal allowance will increase to £11,200 and

there will be a further increase in the basic rate band to £32,400.

Once the personal allowance reaches £12,500, it will be uprated

in line with the national minimum wage.

Dividend taxation

From 6 April 2016 the 10% dividend tax credit will be abolished

and there will be a new dividend tax allowance of £5,000 a

year. New rates of tax on dividend income will apply above the

allowance at 7.5% for basic rate taxpayers, 32.5% for higher rate

taxpayers and 38.1% for additional rate taxpayers. The effect is

to increase the rate of tax on dividends above the new allowance

by 7.5%.

Non-domicile status

Anybody who has been resident in the UK for more than 15 of

the past 20 tax years will be deemed to be domiciled in the UK

for all tax purposes including inheritance tax. This will apply from

April 2017 and a technical consultation will be published later

this year.

From 6 April 2017, individuals who are born in the UK to parents

who are domiciled here will no longer be able to claim non-

domicile status while they are resident in the UK.

There will be no introduction of a minimum claim period for

the remittance basis charge as a result of other reforms to the

taxation of non-UK domiciled individuals. The government had

previously proposed that non-domiciled individuals would have

to claim the remittance basis for at least three years.

Employment taxes and salary sacrifice

The government will actively monitor the effect on tax receipts of

salary sacrifice schemes that reduce employment taxes.

think ahead

Make sure you use your

ISA allowance

to protect

yourself from the new tax

on dividends.

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