UK Budget Update 2, 2005-2006
Stamp Duty Land Tax - great news for first-time buyers
Residential transactions:
The stamp duty land tax zero rate threshold for all residential home buyers, has been doubled from £60,000 to £120,000.
This will affect all residential property transactions from the 17 March 2005. The measure will exempt an extra 300,000 home buyers from stamp duty land tax each year.
To maintain interest in home ownership in the 2000 Enterprise areas the stamp duty land tax zero rate threshold will remain at the higher level of £150,000.
Commercial transactions - only in disadvantaged areas.
Buyers entering into a commercial land transaction in an enterprise area from the 17th of March 2005 will no longer be able to claim the disadvantaged areas relief.
The relief will be preserved for the completion or substantial performance of most contracts entered into on or before the 16th of March 2005.
ISA's - Retention of present limits for 5 years
The present ISA limits will continue to 5 April 2010. They are:£7,000 maximum investment, £3,000 of which can be in cash.
This is a change to the existing regulations which were due to increase the ISA limits from 6 April 2006. This change will now be delayed or reconsidered after 5 April 2010.
Trusts - simplified rules
Trusts with vulnerable beneficiaries.
Backdated to 6 April 2004 the Revenue is to introduce new rules so that a trust will pay tax as if the vulnerable person were receiving the income or gains directly. In most cases this should result in a reduction in tax and an increase in the funds available for distribution to the beneficiaries.
Low income trusts
Introduction of a standard rate band of £500 which will ensure that 25,000 trustees that receive income under this amount will no longer have to submit a self-assessment tax return. This will apply from 6 April 2005.
Extension of Low Budget Film Tax Relief
The present relief will be extended to 31 March 2006.
The Revenue is also introducing measures to counter various tax avoidance schemes in respect of Film Tax Relief.
Landlord Energy Saving Allowance
This allowance will be extended from the 7 April 2005 to include expenditure on solid wall insulation.
The allowance is presently available to landlords who pay income tax and incur expenditure installing loft insulation or cavity wall insulation in dwelling houses which they let. The maximum claim per building is £1500.
Renovation Of Business Premises In Disadvantaged Areas
Revenue are proposing a new Business Premises Renovation Allowance (BPRA) which will provide a 100% first-year allowance.
The allowance will be available to any individual or company who incurs expenditure in bringing qualifying business premises back into business use. The allowance will only be available for property that has been vacant for a year or more and in one of the designated disadvantaged areas of the UK.
The commencement date of the scheme will apply once state aid approval has been granted.
Payments to employees in full-time attendance at universities and technical colleges.
There are two main changes:
- Payments of up to £15,000 (previously £7,000) for an academic year can be made tax free.
- New regulations are being introduced so that these payments can also be made free of class 1 national insurance. The new tax and national insurance treatment will start for payments made for the 2005-06 academic year, commencing the first of September 2005.
Increased benefits for pensioners
- Winter fuel allowance 2005 £200, for over 80s, £300.
- Council tax refund £200.
- Free local bus travel in all areas.
Quick links: Personal and Business Tax Accountancy
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