Budget 2015 - What It Means For Doctors In Bristol

We have dissected and re-dissected this year's budget and here provide a summary of what it all means for Bristol's doctors. Please note this summary only covers changes announced in this budget and items we feel are of most interest to doctors. Please contact us on richard.higgs@wealthwestmedical.co.uk or telephone 0117 966 5699 for a full financial review. 

Income Tax

From April 2016, there will be a tax-free personal savings allowance to remove tax on savings income of up to £1,000 for basic rate taxpayers and £500 for higher rate taxypayers. This will be in addition to the £5,000 zero starting band for savings income.

The personal allowance for doctors will be £10,600 for the 2015/16 (the amount you earn before you start paying tax). In addition, this personal allowance will increase by £200 over the following two tax years to £10,800 for 2016/17 and £11,000 for 2017/18.

The basic rate limit for tax for doctors will be £31,785 for 2015/16 (the amount you earn where you pay tax at 20%). This basic rate limit will increase to £31,900 for 2016/17 and to £32,300 for 2017/18. As a result, the higher rate threshold (your total earnings before you starting paying tax at 40%) will be £42,700 and £43,300 respectively.

The zero starting rate band for the first £5,000 of savings income will be held at this amount for the 2016/17 tax year. Remember this will be in addition to the tax free personal savings allowance.

If you are a doctor with modest savings income it may be that you will benefit from these allowances. Keep an eye out for the higher rate threshold - keeping out of the 40% higher rate tax is a useful strategy, particularly for doctors with private earnings.

Capital Gains Tax

From 6th April 2015, the annual exempt amount increases to £11,100. This is the gain you can make on the sale of capital assets before you start paying capital gains tax (at 18% and 28%). Typically, this will be doctors with share portfolios showing gains - it is really important to use your capital gains allowance each year, perhaps re-investing the proceeds into tax efficient wrappers like ISAs.

In terms of Entrepreneurs Relief, typically on the sale of a Limited Company set-up by doctors with private fee income, gains qualifying for entrepreneur's relief remain at 10% tax on cumulative lifetime gains of up to £10m. Please note that doctors will be able to defer gains, which are otherwise eligible for relief, by investing in an Enterprise Investment Scheme and benefit from entrepreneurs relief when the gain is realised at a later date.

For queries regarding entrepreneurs relief and the setting up of Limited Companies for private fee work please get in touch.

Savings and Investments

For younger doctors, perhaps trainees who have moved to the Bristol area to work, of interest maybe the 'Help To Buy ISA' available from Autumn 2015. This has been introduced to boost savings for first time home buyers. The Government will pay £50 for every £200 saved subject to a maximum of £3,000 which will be paid at the time the property is bought.

In further amendments to the ISA rules, from Autumn 2015, the Government will allow doctors to withdraw and replace money from their cash ISA without this counting towards their annual ISA subscription provided they make a repayment in the same tax year as the withdrawal.

The Government will also be making amendments to the Venture Capital Trusts and Enterprise Investment Scheme rules to further allow investment into smaller and growing companies. Remember, doctors can obtain a tax refund of 30% of the amount invested in a VCT or EIS.

Pensions

The Lifetime Allowance will be reduced from £1.25m to £1m from 6th April 2016. 

New transitional Fixed and Individual Protection will be introduced.

The Lifetime Allowance will be indexed annually in line with CPI from 6th April 2018.

Do you know what the value of your NHS Pension Scheme is combined with any personal pensions? This change could effect you and perhaps require application for another form of protection.

For a full financial review incorporating how the budget changes may effect your financial plans then get in touch on richard.higgs@wealthwestmedical.co.uk or telephone 0117 966 5699.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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