Budget 2015 - Mini Bonds - some good news?
Yesterday, the Chancellor announced that the Government will explore further extending the list of ISA-eligible products to include debt and equity securities offered via crowd funding platforms.
Yesterday, the Chancellor announced that the Government will explore further extending the list of ISA-eligible products to include debt and equity securities offered via crowd funding platforms. They will consult on this proposal in the summer this year. Given the increasing flexibility of ISAs, this will be a welcome shot in the arm for those companies wanting to raise funds through crowd-funding as opposed to more traditional bank debt.
As part of the Chancellor's reform of the taxation of personal savings, he announced a new Personal Savings Allowance, to be created from April 2016. It is therefore subject to the outcome of the General Election. If introduced, it will exempt the first £1,000 of savings income from any tax for basic rate taxpayers and the first £500 of any savings income for higher rate taxpayers. In keeping with the Chancellors' stance on additional rate taxpayers, this change will not help them.
As a result, the automatic 20% withholding tax at source operated by banks and building societies on non-ISA interest income will no longer be necessary.
The Budget announcement refers only to savings income paid by banks and building societies. It remains to be seen, therefore, whether this abolition will extend to comparable interest payments made by other entities, such as companies paying interest on mini bonds. Whilst it may not, because the source legislation requiring banks and building societies to withhold tax is different from that applying to companies, it is to be hoped that it will. The basic point is the same and otherwise there will not be a level playing field for entrepreneurial companies wishing to issue mini bonds and similar instruments to raise funds from individual savers. Of course, if mini-bonds may be added to ISAs, the issue may be less important in many (but by no means all) cases.
As part of the Chancellor's reform of the taxation of personal savings, he announced a new Personal Savings Allowance, to be created from April 2016. It is therefore subject to the outcome of the General Election. If introduced, it will exempt the first £1,000 of savings income from any tax for basic rate taxpayers and the first £500 of any savings income for higher rate taxpayers. In keeping with the Chancellors' stance on additional rate taxpayers, this change will not help them.
As a result, the automatic 20% withholding tax at source operated by banks and building societies on non-ISA interest income will no longer be necessary.
The Budget announcement refers only to savings income paid by banks and building societies. It remains to be seen, therefore, whether this abolition will extend to comparable interest payments made by other entities, such as companies paying interest on mini bonds. Whilst it may not, because the source legislation requiring banks and building societies to withhold tax is different from that applying to companies, it is to be hoped that it will. The basic point is the same and otherwise there will not be a level playing field for entrepreneurial companies wishing to issue mini bonds and similar instruments to raise funds from individual savers. Of course, if mini-bonds may be added to ISAs, the issue may be less important in many (but by no means all) cases.