Budget 2015: round up

  • March 20, 2015
  • By Hunters Law

A summary of some of the Chancellor’s announcements for private clients in his Budget of 18th March 2015.

This was a mixed Budget, with some measures to take effect immediately under the Finance Bill due to be published on Tuesday 24th March, but many other announcements which appear to be political and may or may not take effect depending on the result of May’s election.

Some of the main announcements for private clients are:

Extension of capital gains tax (CGT) to non-UK residents

The application of CGT will be extended to non-UK residents disposing of UK residential property from 6th April 2015. Individuals will pay CGT at the usual rates (basic rate 18%, higher rate 28%) and companies will pay corporation tax at the usual rate of 20%. This is to be included in Tuesday’s Finance Bill.

What is surprising is that this appears to offer an advantage to those holding through non-resident companies rather than personally, which seems to be at odds with the government’s previous attempts to discourage corporate ownership through the introduction of the ATED regime.

Alongside the extension of CGT to non-residents come changes to principal private residence relief, with a requirement that in order to be able to qualify for the relief either the taxpayer or the taxpayer’s spouse must spend at least 90 midnights in the relevant property during any given tax year.  This is to prevent individuals with one home in the UK and another/others abroad from claiming PPR on their UK property unless they actually spend a ‘reasonable’ amount of time there.  It will apply to UK residents and non-residents alike.

Changes to entrepreneurs’ relief from CGT

From 18th March 2015:

  • A disposal of a personally owned asset will only qualify for the relief if it is accompanied by a significant disposal of the individual’s share in the business.
  • The definition of ‘trading company’ is amended so that it will no longer be sufficient for a company simply to participate in a joint venture or partnership if it carries on no trade if its own.

There will be no relief for goodwill on the transfer of a business to a related close company after 3rd December 2014 (as announced in the Autumn Statement).

There is to be a review of entrepreneurs’ relief for academics disposing of shares in companies exploiting intellectual property that they have contributed to.

Restriction of CGT and corporation tax (CT) exemption for wasting assets

The exemption from CGT and CT for wasting assets is to be restricted so it only applies where the asset is used in the business of the person disposing of it, with effect from 6th April 2015 for CGT and 1st April 2015 for CT.  This is unsurprising following HMRC losing a case in the Court of Appeal and being refused leave to appeal further (HMRC v The Executors of Lord Howard of Henderskelfe (deceased) [2014] EWCA Civ 278 in which the deceased’s executors were allowed the relief on a painting owned personally by the deceased but used in a separately owned business).


As well as the transferability of ISA allowances between spouses on death, announced in the Autumn Statement, for which draft legislation has already been published and which we hope will be clearer in Tuesday’s Finance Bill, on Wednesday the Chancellor announced the introduction of a new ‘Help to Buy ISA’ and measures to extend the types of investment allowed within ISAs and to permit individuals to withdraw and replace funds from their ISAs without losing allowances they have already built up.  Wednesday’s announcements will not be included in next week’s Finance Bill.

Personal savings allowance

The introduction of a new personal savings allowance which will be in addition to ISA allowances to take effect from 6th April 2016.  The first £1,000 of savings will be tax free for basic rate taxpayers and the first £500 for higher rate taxpayers (no allowance for additional rate taxpayers).  Not to be included in Tuesday’s Finance Bill.

Increased premium bond investment limit

This will go up to £50,000 (from £40,000) from 1st June 2015, as announced in the 2014 Budget.

Farmers’ averaging period extended

The period over which farmers can average their profits for income tax purposes is to be extended from two years to five, with effect from 6th April 2016.  This will not be included in Tuesday’s Finance Bill.


The lifetime allowance will be reduced to £1million (from £1.25million).

There will be new flexibility for those with existing annuities, who will be able to sell these to third parties in return for a lump sum or other retirement benefit.  This is intended to help those who would not otherwise benefit from the new pension measures due to come into force on 6th April 2015, but will not be introduced until April 2016.

Inheritance tax

As well as the measures announced in the Autumn Statement (exemptions for medals and other awards and for emergency services and humanitarian aid workers) there is to be a review of the use of Deeds of Variation.  This announcement will not result in any immediate changes in the law, but it is possible that further developments may follow depending on the outcome of the review (due in autumn 2015) and of May’s election.


Changes to the inheritance tax rules for trusts aimed at preventing a tax advantage being obtained through the use of multiple trusts will not be included in the Finance Bill published next week.  The government published draft legislation last December and has announced that this will be amended to take account of concerns raised since, but whether this progresses further will depend on the outcome of the election.

The above is not intended as comprehensive advice.  If you have any tax-related questions please contact the partner at Hunters having responsibility for your legal matters or (for new enquiries) a member of our Private Client team.

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