The chancellor George Osborne has made his budget report. Highlights include changes to the Entrepreneurs' Relief rules for limited company investment in partnerships, associated disposals and joint venture holdings and a restriction on CGT relief on wasting assets. Do read on to the end.

Certain clauses in respect of measures previously announced have been left out of the Finance Bill, see Bye bye Trivial Benefits.

Income Tax

  • The personal allowance increases to £10,800 for 2016/17 and £11,000 by 2017/18.
  • The higher rate tax threshold will increase to £43,300 in 2017/18.
  • A new personal saving allowance will apply from 2016/17: the first £1,000 of interest is tax free for basic rate taxpayers, the allowance for higher rate taxpayers will be £500.
  • The annual income tax return will be abolished from 2020 and taxpayers may file real-time accounts using their portable digital equipment. This will also allow taxpayers to pay their tax in real time rather than waiting until 31 January following the end of the tax year.
  • Farmers will, from 2016/17, be allowed a five-year period in respect of averaging their profits (an increase from the current two years).

National Insurance

  • Class 2 NICs will be abolished in the next parliament.


  • From 2018 the annual contribution limit will be indexed.
  • The lifetime contributions limit decreases from £1.25m to £1m in 2016/17, with no changes anticipated to the annual investment limit of £40,000.
  • Existing pensioners who are receiving annuities will be able to cash these in for lump sums without a 55% tax charge.


From April 2015

  • ISA subscription limit £15,240.
  • Junior ISA £4,080.

From Autumn 2015

  • Introduction of a flexible ISA to allow people to withdraw ISA savings and reinvest without loss of interest.
  • A help-to-buy ISA: a 25% top up by government on saving for deposits. Invest £200 per month and the government will top it up by 25% (£3,000 maximum available).

Child Trust Funds

  • From 6 April 2015 the subscription limit increases to £4,080.

Employment taxes

  • Travel rules: includes a clamp down on agencies, umbrellas and personal service companies who abuse the temporary tax travel rules. Any changes will take place after "full and formal" consultation and would be intended to take effect from 6 April 2016 and legislated for in a future Finance Bill.
  • IR35: HMRC estimates that the annual administrative burden of IR35 is £16m and the cost to the exchequer of abolishing it is £550m. The government holds the view that the administrative burden of IR35 is proportionate when considered against the fiscal risk to the exchequer of those incorporating to disguise employment income. 
  • Trivial benefits: plans to introduce a statutory relief for trivial benefits provided by employers to their employees have been shelved, for the time being at least.

Capital Gains Tax

Entrepreneurs’ Relief

  • ER associated disposals rules: ER will not be available to reduce CGT on gains accruing on the disposal of personally held assets used in a business carried on by a company or a partnership unless they are disposed of in connection with a disposal of at least a 5% shareholding in the company, or a 5% share in the partnership assets. This affects disposals made on and after 18 March 2015.
  • ER joint ventures and partnerships: ER will only apply to an investment of at least 5% in a directly held shareholding in a genuine trading company. No relief will be given in respect of shareholdings in a company that has no other trade than holding shares in a joint venture company or holding an interest in a Limited Liability partnership unless the company has a significant trade of its own. It will affect disposals on and after 18 March 2015. 
  • ER and incorporation: ER will not be denied for the relevant partners who, when a partnership incorporates, do not hold or acquire a stake in the new company. This measure is back-dated to 3 December 2014.

Capital Gains Tax: wasting assets

  • An asset must have been used in the owner’s business to be eligible for the exemption on its later disposal. This measure is to prevents assets, such as works of art, being loaned to and used by another party for a period of time for business purposes simply to qualify for the exemption. This follows the Court of Appeal decision in HMRC v The Executors of Lord Howard of Henderskelfe. It will affect disposals made on or after 1 April 2015 (companies) and 6 April 2015.


The rules are to be amended at a later stage to enusre that:

  • All investments are made with the intention to grow and develop a business.
  • All investors are required to be independent from the company at the time of the first share issue.
  • A new qualifying criteria is introduced to limit in some circumstances, relief to companies where the first commercial sale predated the investment.
  • There will be an investment cap for the investee of EIS and VCT of £15m, or £20m for knowledge-intensive companies
  • The employee limit for knowledge-investment companies increases to 499 employees.


  • The requirement that 70% of SEIS money must be spent before EIS or VCT funding can be raised will be removed at some later stage.

Corporation Tax: creative industries reliefs

Film Tax relief (FTR)

  • Increase in the rate of FTR to 25% from 1 April 2015.

High-end TV Tax relief

  • The minimum UK expenditure requirement reduces from 25% to 10% from 1 April 2015. The reduction in the minimum UK expenditure requirement will also apply to the Animation Tax relief.
  • Relief will be introduced for producers of children's TV programmes.

Corporation Tax: contrived loss arrangements

  • Companies are prevented from converting their old carried-forward losses into new reliefs that can be used more flexibly. Where the rule applies, companies will be prevented from using the carried-forward reliefs to reduce taxable profits that arise from the arrangements. From 18 March 2018.


  • There will be a restriction on VAT reclaim on expenses charged by overseas branches.
  • Charities: scroll down for new measures.

Capital Allowances

  • The Annual Investment Allowance will not fall to £25,000 but will be extended. 
  • Sale and leaseback anti-avoidance new measures from 26 February 2015 apply to ensure that allowances are only given in respect of expenditure incurred.


  • The government will consult on perceived abuse of IHT using deeds of variation.
  • Changes to the ‘death in service’ exemption: it will be extended to emergency service personnel.


  • New penalties for tax evasion and for advisers who assist evaders.

Disclosure Opportunities

  • The Liechtenstein and the Crown Dependancies disclosure opportunities both end early on 31 December 2015.


  • The bank levy rises to 0.21%. 
  • No Corporation Tax relief will be permitted for penalties (such as those for miselling PPI)

Reform of business rates

  • A review, set to report back by Budget 2016, will examine the structure of the current system, and will look at how businesses use property, what the UK can learn from other countries about local business taxes, and how the system can be modernised.


  • Automatic Gift Aid on cash donations limit will rise from £5,000 to £8,000.
  • Medical courier charities will be allowed to reclaim the VAT incurred on the purchase of goods and services, and the acquisition and importation of goods from outside the UK, used for their non-business activities.
  • A new VAT refund scheme for palliative care charities. It will enable these charities to reclaim the VAT they incur on purchases made to support their non-business activities.

North Sea Oil

  • PRT reduction from 50% to 35%.


  • Cutting beer duty by 1% and cider and spirits duty by 2%.
  • The fuel duty increase scheduled for September is cancelled: '£10 off a tank with the Tories'.
  • No changes for tobacco and gaming.


  • An extra £1.25 billion on children's mental health services.


'Digital by default' has been a government aspiration since the last government. The civil service realised there was a thingy called the internet because GCHQ was very concerned about data security. Then some people realised it might save postage costs. It was not until MPs discovered that some of their constituents were asking them for something called 'emai' that the House of Commons woke up to the digital age. The fact remains that a large number of parliamentarians still do not quite grasp the concept of 'digital', and as a result there is very little interest by them in creating a robust broadband infrastructure in the UK. 

And for the rural 'not-spots'?

  • Some lucky people will hyper-fast broadband, hopefully by 2020, so that they may file their tax accounts in real time (see Income Tax, above). 
  • Those in mainly rural areas who have been left out of BT and council plans for fibre-optic broadband must wait to pay for the benefit of satelite ('warning, severe data download restrictions may be applied, upgrade to our premium service to pay more for less') or otherwise move their business to London in order to fully participate in the digital world.
  • Back on the farm, many farmers are relieved to find that they do not have to claim their Farm Payments online; instead they must use the old-fashioned paper form. There have been large-scale problems with the new IT system for farming payments; not that all farmers know or care, who is online in a rural area?

Join the Facebook page 100% Superfast Broadband for the UK, if you would like to see investment in this technology.