As the 2015/16 tax year dawns on 6 April, new tax and pensions legislation will come into effect. Stephen Herring, the IoD’s head of taxation, and Malcolm Small, its senior adviser on financial services policy, explain whether or not you’ll be affected
The change: Companies will see the tax cut to 20 per cent, making the UK a friendlier environment for foreign investors.
Who’ll be affected? Medium-sized businesses. By cutting the rate the UK has definitely attracted foreign direct investment. It’s a sort of litmus test to measure how business-friendly the tax system is.
COMPANY CAR TAX
The change: Electric vehicles which were previously exempt from taxation will receive a five per cent BIK (benefit-in-kind) rate.
Who’ll be affected? Electric car owners. Company car schemes were previously hugely advantageous but have become like hen’s teeth because the tax position hasn’t favoured company cars for some time.
The change: People will be able to access pension pots at 55.
Who’ll be affected? Any over-55s with defined contribution pension schemes. The lump sum will work for people who have retired, become ill and may not live too long, plus any consumers with debts to clear. Anything that comes out will be subject to tax at the highest marginal rates.
The change: National insurance employers’ contributions for those under 21 will be scrapped.
Who’ll be affected? Businesses hoping to employ under-21s. It would be good to see a simplification of national insurance which encouraged all businesses to take on more employees, therefore saving the state from paying people for not being employed.