‘Autumn Statement 2015’

Autumn Statement 2015 -our eshot summary

Monday, November 30th, 2015

This was a Spending Review and Autumn Statement in one, which was heavier on the spending side.

We’ve focused on the tax issues arising from the event and summarise them in our eshot here.

If you have any questions, please contact [email protected] or call 01527 558539..

Autumn Statement 2015 – economic overview

Wednesday, November 25th, 2015

The economy – an overview

 

The public finances look rosier than expected, thanks mainly due to higher than expected tax revenues and lower borrowings (£8bn lower than planned).

The Chancellor’s figures came courtesy of the independent Office for Budget Responsibility; Gross Domestic Product (UK’s income) grew by 2.4% in 2015 and is set to continue at a similar pace for the rest of the forecast period until 2020, where growth is predicted to be 2.3%.

This, combined with the news that 1m extra jobs will be created over the next 5 years puts the UK in first place for fastest growing economy in the developed world. Little details over the type of jobs though (full or part-time?).

Inclusion of housing Association stats in the public sector figures had a slight impact on borrowing and debt figures but the overall picture remained relatively unchanged.

The government is due to run a surplus of £10.1bn by 2019/20, bigger than previously expected; there is currently a deficit of £73.5bn.

Real wages are growing by rates not seen since before the recession and unemployment rate fell to 5.3% in September 2015, the lowest rate in 7 years. Again, much has been made of the fact that the labour market has been stimulated by more part-time jobs and those without the security of an employment contract.

Public spending is expected to stabilise and increase each year in line with economic growth. The main areas of spending will be on national security and key public services, in addition to long term capital infrastructure..

Autumn Statement 2015 – future measures

Wednesday, November 25th, 2015

Future Measures……

Moving forward to the Budget 2016 and the various consultations in place here are some of the items we expect to see:

  • Salary Sacrifice – Further consultation is being sought to assess what action can be taken to combat the rise in use of these arrangements.
  • Pension Tax Relief – We expect to see further restrictions on pension tax relief currently £40,000 limit for higher rate relief to be announced.
  • ISA Tax Relief in Probate – Expecting to see legislation to allow the ISA tax relief to apply during the estate administration period.
  • Loan Relationships – Following new accounting standards being introduced further rules on corporate debt relief are expected.
  • Tax Avoidance – Various new measures are expected to penalise those who undertake these schemes.

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Autumn Statement 2015 – corporate & property taxes

Wednesday, November 25th, 2015

Buy to Let Properties / Second Homes

Further to the interest restriction to be phased in from April 2017, the Chancellor announced further measures today to hit this sector:

  • Capital gains tax due on residential properties is currently paid in the January following the end of the tax year via the self- assessment tax return. New measures announced today will see the tax payment date aligned with the stamp duty date of 30 days following completion for residential properties from April 2019.
  • Higher rates of stamp duty will be introduced from April 2016 for properties in excess of £40,000. An additional 3% above the current rates will be applied for property to let properties and second homes.

 

Avoidance and Evasion

The Government continues to focus on tax avoidance schemes including increasing resources to this section to implement further measures. In April 2016 the following are some of the measures we expect to see coming through:

  • A new penalty is being introduced of 60% of tax due to be charged in all cases successfully tackled by the GAAR.
  • A new criminal offence will be enforced for tax evasion which removes the need to prove intent for the most serious cases of failing to disclose offshore income and gains.
  • New civil penalty for offshore tax evaders which is aimed at deliberate offshore tax evasion by the introduction of a penalty linked to the value of the asset.
  • A new criminal offence for corporates failing to prevent tax evasion from their agents.

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Autumn Statement 2015 – personal tax

Wednesday, November 25th, 2015

Personal Tax

State Pension

From April 2016, the basic state pension will rise to £119.30 per week, an increase of £3.35. This will be the highest real terms increase to the state pension for 15 years.

From April 2016, those reaching pensionable age will receive a new, ‘single-tier’ pension with a starting rate of £155.65. Those reaching pensionable age before the reforms are introduced will receive their State Pension in line with the current rules

Childcare

The proposed new Tax Free Childcare system which was originally due to be introduced this Autumn now looks as though it will be introduced  early 2017, providing up to £2,000 a year per child to help working parents with their childcare costs. The Autumn Statement and Spending Review sets an upper income limit per parent of £100,000 and a minimum weekly income level per parent equivalent to 16 hours (worked at the National Living Wage) to qualify for the Tax-Free Childcare.

Employment

Apprenticeship levy – The government will introduce the apprenticeship levy in April 2017. It will be set at a rate of 0.5% of an employer’s pay bill and will be paid through PAYE. Each employer will receive an allowance of £15,000 to offset against their levy payment. This means that the levy will only be paid on any pay bill in excess of £3 million. Less than 2% of UK employers will pay the levy.

Automatic enrolment minimum contribution rates – The government will delay the next two scheduled increases in automatic enrolment minimum contribution rates by 6 months each, to align these changes with the start of the tax year.

Employment intermediaries and tax relief for travel and subsistence

As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016.

Company Cars

Company Car Tax diesel supplement – From April 2016 the 3% point differential between diesel cars and petrol cars will now be retained until April 2021.

 

 

 

 

 

Taxation of sporting testimonials

Following the consultation announced at Summer Budget 2015, the government will legislate to simplify the tax treatment of income from sporting testimonials. From 6 April 2017, all income from sporting testimonials and benefit matches for employed sportspersons will be liable to income tax. In addition, an exemption of up to £50,000 will be available for employed sportspersons with income from sporting testimonials that are not contractual or customary. This legislation will apply where the sporting testimonial is granted or awarded on or after 25 November 2015, and only to events that take place after 5 April 2017. Separate legislation will be introduced before 6 April 2017 for the National Insurance treatment of this income which will follow the income tax treatment.

Administration

Tax Digital Tax Accounts

At the March 2015 Budget the government announced plans to transform the tax system over the Parliament by introducing personalised digital tax accounts. The Spending Review and Autumn Statement announces that the government will: invest £1.3 billion to transform HMRC into one of the most digitally advanced tax administrations in the world. Most businesses, self employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account, reducing errors through record keeping. HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology. This will not apply to individuals in employment, or pensioners, unless they have secondary incomes of more than £10,000 per year. The government will publish its plans to transform the tax system shortly and will consult on the details in 2016..

Autumn Statement 2015 – What was missing?

Wednesday, November 25th, 2015

What was missing?

‘Middle class tax perks’ as they were being dubbed in the press– salary sacrifice etc – the government is currently considering the position

R&D tax credits/reliefs – following high-profile speeches made at GCHQ and Imperial College London, some quarters were hoping for announcements made to R&D but this was not to be; instead extra spending on national security was announced

IHT – reductions in IHT relief on business & agricultural property – this was widely mentioned and expected but nothing in the details this time

Anti avoidance on dividends taken pre April 2016 – following the expectation that many business owners would

Reduction in CGT reliefs – Entrepreneurs relief – we’d been expecting to see a reduction to this generous relief given the need to make savings

Deeds of variation – the government has considered their use but no new measures are expected at the moment.