Yesterday saw the Chancellor present his traditional Autumn statement. Here is a summary of the main tax changes which we feel may have an impact on doctors in Bristol.
1. Income Tax
Personal Allowance and Tax Bands
From 6th April 2015 personal allowance for doctors will increase from £10,000 to £10,600. This is the amount that is allowed before you start paying tax.
However the basic rate band will reduce from £31,865 to £31,785. This means that for doctors with taxable earnings over £31,785 will be taxable at the higher rate of tax of 40%.
The result of the above changes is positive overall though - an additional £520 of income can be earned before doctors income is liable to higher rate tax.
Transferable Income Tax Allowance
From April 2015, for doctors whose spouse does not work, or at least is not a higher rate tax payer - you can transfer £1,060 of your personal allowance to your spouse. This will save further tax for yourselves as a couple.
Remittance Basis Charge
Are you a doctor who has come to the UK from abroad to work? Are you a non-domiciled doctor who is resident in the UK? The rules are complex and specific advice is recommended. However, it was announced that the annual charge payable by a non-domiciled individual who is resident in the UK and who wishes to retain access to the remittance basis of taxation will be increased, depending on the circumstances, to charges ranging from £30,000 to £90,000. Please get in touch if this situation applies to you.
2. National Insurance Contributions (NICs)
From April 2015, the £2,000 annual Employment Allowance for employer NICs will be extended to care and support workers. Do you both work full-time as doctors and employ a care worker? If you do and employ a care worker on a salary of up to £22,500 you will pay no employer NICs.
3. Capital Gains Tax
The annual exemption will increase from £11,000 to £11,100 for tax year 2015-16. This exemption can help any doctors looking to sell capital assets for a profit, like buy-to-let homes or share portfolios. Broadly the first £11,100 of any gain will not be subject to tax.
4. Savings and Investments
Individual Savings Accounts (ISAs)
Annual subscriptions to ISAs will increase to £15,240 for 2015-16 and the annual subscriptions to Junior ISAs and Child Trust Funds will increase to £4,080. This is your annual tax free savings account and is a must for any doctors looking to make tax free savings. Also for doctors with children the Junior ISA is an excellent way to save for the child's school and university fees. With the upcoming changes to the NHS Pension Scheme it is vital that doctors look to diversify across tax wrappers and ISAs is the perfect place to start.
5. Property Tax
Stamp duty on purchases of residential property is being reformed with effect from 4th December 2014. The rates and thresholds will be as follows:
- The portion of the transaction value up to £125,000 is charged at a rate of 0%
- The portion of the transaction value between £125,001 and £250,000 is charged at a rate of 2%
- The portion between £250,001 and £925,000 is charged at a rate of 5%
- The portion between £925,001 and £1,500,000 is charged at a rate of 10%
- The portion over £1,500,001 is charged at a rate of 12%
If you are doctor considering purchasing a property (either as a main residence or a 2nd home) please bear these new rules in mind when making your initial enquiries.
6. Tax Avoidance
The Government continued its relentless assault on tax evasion, tax avoidance and 'aggressive tax planning'. Much of the Autumn Statement was focussed on multi-national corporations - the headline makers.
However there was still some attention paid to individual tax planning. Please, if you are a doctor who has been approached by an aggressive tax planning promotor, get in touch for an independent look. It may not be worth the stress and hassle and the Government are clamping down hard on such schemes.
If you are a doctor interested in your tax status and tax planning in general please get in touch on email@example.com or 0117 966 5699. We will be please to help.