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Autumn Statement 2015 Summary

 

In his 2015 Spending Review and Autumn Statement address, the Chancellor (George Osborne) said that the government is delivering on its commitment to put economic and national security first. We break down the main highlights affecting our clients below, but here are the headline announcements:

 

Tax Credits

 

As confirmed in the Summer Budget, the Chancellor said that the £12 billion of welfare savings the government has committed to will be delivered in full, in a way that helps families during the transition to the new 'National Living Wage'. However, in a dramatic u-turn, the Chancellor went on to say that after listening to recent representations made concerning controversial cuts to tax credits, improvements in public finances mean that the proposed changes will not be phased in as planned but 'avoided altogether'. 

 

Tax Collection & Avoidance

 

In the Summer Budget, the government announced that revenue of some £5 billion would come from measures on tax avoidance, evasion and imbalances. Further to this, the Chancellor announced new penalties for the General Anti-Abuse Rule (GAAR), action on disguised remuneration schemes and stamp duty avoidance. He said there would measures to stop abuse of the intangible fixed assets regime and capital allowances.

 

HMRC News

 

In accordance with recent announcements concerning HMRC's 10-year modernisation plans, the Chancellor confirmed that HMRC will make savings of 18% in the departmental budget through efficiencies which include the restructure of 170 separate offices into thirteen regional centres, and the development of digital tax accounts to be managed online. Some of the savings are to be reinvested, with an extra £800 million, in the fight against tax evasion - an investment with an anticipated return of almost ten times in additional tax collected.

 

Below is a summary of the key highlights affecting our clients from the Spending Review and Autumn Statement, based on the documents released on 25 November 2015. It is possible that changes can be made between now and the publication of the draft legislation.

 

Digital tax accounts

 

At the Spring Budget 2015 the government announced proposals for the introduction of personalised digital tax accounts to replace the current annual tax returns system. During his Autumn Statement speech the Chancellor promised an injection of £1.3bn to deliver “the most digitally advanced tax administration in the world” by 2020. The government has now announced that companies, unincorporated businesses, self-employed people and landlords will all be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. The measure will not apply to employees, or pensioners, with a secondary income source from self-employment or property and whose gross income from this secondary source is under £10,000 per year. 

 

The measure will be implemented for income tax and NICs from April 2018, VAT from April 2019 and corporation tax from April 2020. The roll out will be staggered and there will be testing before the reporting becomes mandatory.

 

This is a key area we as a practice are keeping an eye on, as HMRC look to go ‘full digital’. We will keep you up to date as more information on the practicalities appears.

 

Further Highlights

 

Company Contractors

 

Employment intermediaries: tax relief for travel and subsistence

 

As announced at Summer Budget 2015, the government is to restrict tax relief for travel and subsistence expenses for workers engaged through employment intermediaries, such as umbrella companies or personal service companies, and ‘working under supervision, direction or control’. Relief will be restricted for individuals working through personal service companies where the intermediaries' legislation (IR35) applies. 

 

This change will take effect from 6 April 2016.

 

Personal Tax

 

Individual savings accounts

 

There will be no change to the Individual Savings Account (ISA), Junior ISA or Child Trust Fund (CTF) annual subscription limits for 2016-17. The ISA limit will remain at £15,240, and the Junior ISA and CTF annual limits will remain at £4,080.

 

Starting rate of savings tax

 

The band of savings income that is subject to the 0% starting rate will be kept at its current level of £5,000 for 2016-17.

 

Childcare

 

Two changes were made to the proposals for the Tax Free Childcare account:

 

1.) The upper earnings limit is being dropped from £150,000 to £100,000

2.) Both parents must be working the equivalent of 16 hours at the National Minimum Wage, doubled from 8 hours

 

New method of assessment

 

A new, ‘simpler process’ (according to the announcement!) for paying tax will take effect from 2016-17. The new system will be used for self-assessment taxpayers who have simple tax affairs where HMRC already hold all the data needed to calculate the tax liability, and where existing payment processes are not available. Taxpayers will be sent a calculation which will be a legally enforceable demand for payment, although taxpayers will be able to challenge and appeal the calculations.

 

Landlords

 

SDLT on acquisition of additional properties

 

From 1 April 2016, higher rates of stamp duty land tax (SDLT) will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes. The rate will be 3% above the current SDLT rates.

 

Capital Gains Tax: new payment window

 

From April 2019, a payment on account of any capital gains tax (CGT) due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal. This will not affect gains on properties which are not liable for CGT due to private residence relief. The government will publish draft legislation for consultation in 2016.

 

Employers

 

Payroll: RTI relaxation for micro-employers to end

 

The two year temporary relief, allowing existing micro-employers (those with nine or fewer employees) using Real-Time PAYE to report all payments they make in a tax month on or before the last payday in the tax month rather than on or before each and every payday, will end on 5 April 2016.

 

As always, if you have questions or queries please do not hesitate to get in contact with us

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Friday, 27 April 2018

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