Autumn Statement 2015: Instant digest

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The Chancellor George Osborne delivered his Autumn Statement today and while the speech itself was thin on detail, the emerging documentation is a trailer for what’s yet to come.

Here we outline some of the main policy changes:

Economy

The general economic picture from the OBR saw a big rise in forecast tax revenues, a fall in interest costs and money raised from the apprentices levy. This additional tax and interest cash will be used to soften the blow of departmental cuts and to fund a £12bn tax credit U-turn, according to the Chancellor. The OBR revealed that the “direct effect of policy decisions has been to push borrowing higher between 2016 and 2020”. Outgoing BBC economics editor Robert Peston commented that the Chancellor has been “bailed out by OBR forecast of higher tax revenues and lower interest costs”.

Business measures

News that that the small business rate relief scheme will be extended for another year was welcomed by most business organisations, including the FSB, which proclaimed: “Good news for 600,000 small businesses with business rates relief extended for another 12 months.” Osborne outlined the government’s plan to transfer power across the country in a “devolution revolution”, paving the way for 100% business rate retention, giving councils the power to cut business rates to boost growth. The closest to a rabbit-hat combo we got was the announcement that there will be a tax on big business to pay for new apprenticeships. The levy will be set at 0.5% of the payroll bill, but a £15,000 allowance means that 98% of employers will not pay. There was surprise generated by the level of spending in Osborne’s statement, but the OBR’s optimistic forecasts for tax revenues, re-evaluation of housing association debt, falling interest costs and money generated from stamp duty and the apprentice levy allowed Osborne to soften the blow of government spending cuts.

Capital gains tax

From April 2019, a payment on account of any 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. Draft legislation will be published for consultation in 2016.

Anti-avoidance measures

The general anti-abuse rule (GAAR) was given more teeth with new penalties in the Autumn Statement 2015. The government will introduce a new penalty of 60% of the tax due to be charged in all cases successfully tackled by the GAAR and will make small changes to the GAAR’s procedure to improve its ability to tackle marketed avoidance schemes. According to the Spending Review/Autumn Statement report (section 6.7): “New rules will be introduced to stop avoidance of stamp tax where ‘deep in the money’ options are used to transfer shares to a depositary receipt issuer or clearance service.” Finance Bill 2016 measures with immediate effect from 25 November 2015 focus in on the following policy measures including loans to participators, trustees of charitable trusts; capital allowances and leases; and related party rules, partnerships and transfers of intangible assets.

Digital tax accounts

George Osborne promised in his Autumn Statement that the UK will have “the most digitally advanced tax administration in the world” by investing £1.3bn in digital tax accounts. All small businesses and individuals will have access to the digital tax accounts by 2016-17. The government will publish its plans to transform the tax system shortly and will consult on the details in 2016.

Stamp duty hike for second homes

Higher rates of SDLT will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes, from 1 April 2016. The higher rates will be 3% above the current SDLT rates. The government will also consult in 2016 on changes to the SDLT filing and payment process, including a reduction in the filing and payment window from 30 days to 14 days, coming into effect in 2017 to 2018. The government will use this additional tax to invest in supporting their housing agenda and doubling the housing budget. However, the government will consult whether the exemption for corporates and funds owning more than 15 residential properties is appropriate.

Personal services companies - the phantom menace

The great pre-Autumn Statement PSC scare story proved to be just that. Somebody leaked suggestions to The Guardian, Mail and contractor representatives about introducing a formal employment status test to confirm whether or not a contractor was an employee. Or some of those parties may have got the wrong end of the supervision, direction and control stick that will be enacted with the revised travel and subsistence legislation due to take effect from 6 April 2016. Rather than bringing thousands of freelance contractors on to corporate payrolls, the Chancellor has reined in his anti-contractor urges to promise a consultation on restricting T&S relief to PSCs caught by the intermediaries legislation [not quite so - see comments below, Ed]. As FreeAgent’s Ed Molyneux summarised in our live Autumn Statement blog, “Looks like T&S restrictions will only apply to those caught by IR35 already...” Look out for the draft legislation when new Finance Bill clauses are published in two weeks' time.

”Action on disguised remuneration schemes” - barely

This was one of several anti-avoidance measures promised by the Chancellor during his speech. Scouring the Summary of Spending Review and Autumn Statement document uncovered a stray paragraph buried under heading 12.2 indicating “The government will consider legislating in a future Finance Bill to close down any further new schemes intended to avoid tax on earned income, where necessary, with effect from 25 November 2015.” Rather than prefiguring a more detailed adventure into employment status issues (see “Phantom menace” section above), it seemed to be “a tiny bit of tweaking of legislation that works” in the words of BDO’s Philip Fisher.

AccountingWEB community reaction

AccountingWEB’s live expert panel will be poring over the Autumn Statement documentation this afternoon, but during the speech itself there was a sense of resignation. Philip Fisher was underwhelmed by the lack of tax announcements, spotlighting the Chancellor’s “tampon tax” crowd favourite as evidence: “The big tax headline to date is no change to tampon tax. Is that the best he can do?”

Meanwhile, the AccountingWEB community pounced on the Chancellor, questioning why CGT on disposals of residential property will have to be paid within a month of the disposal. “Wonder how many more pages of legislation will be needed to deal with this acceleration and how fast HMRC will be where later losses subsequently extinguish the liability,” asked DJKL.

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25th Nov 2015 16:48

Please tell me where

There is reference to a consultation on "restricting T&S relief to PSCs caught by the intermediaries legislation"?

As far as I can see, the new rules come in on 6th April to deny tax relief for those companies.  I can't see any mention of a consultation in this regard?

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25th Nov 2015 17:46

Check the 2nd last sentence in para 3.20 of the report

"3.20 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."

Source: 2015 Spending Review and Autumn Statement blue book

I'm aware of the general T&S plans for April, but that second last sentence was not a proposal I had heard before.

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25th Nov 2015 17:58

SDLT hike

I might have missed this elsewhere, but would I be right in thinking that the 3% SDLT increase on BTLs doesn't apply to Scotland?  We have LBTT not SDLT, and the announcement is quiet on this front - should we expect to see hoards from the south buying up Scottish property instead of half of Cornwall?! 

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25th Nov 2015 18:13

Still dont see it john
It says following consultation which, to me, means after consultation.

Your article says that they will consult. When infact the consultation has already been and gone.

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By NeilW
25th Nov 2015 18:29

What about the Tax Simplification Section?
"Tax simplification

Office of Tax Simplification (OTS) review of employment status – The government has responded to the final report of the OTS review of employment status and is taking forward the majority of recommendations."

Did everybody miss that one or am I reading too much into it

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By NH
26th Nov 2015 07:01

short on detail

NeilW wrote:
"Tax simplification Office of Tax Simplification (OTS) review of employment status – The government has responded to the final report of the OTS review of employment status and is taking forward the majority of recommendations." Did everybody miss that one or am I reading too much into it

Of course we are short on detail on what exactly GO means, but I seem to remember that the OTS review consisted mainly of recommendations for further studies to be made, but the basic thrust was that all taxes and NICs should be aligned across the board for employed and self employed.

I also remember that a merging of tax and NI was (once again) recommended, and that the review did not cover IR35.

So what did you mean by that little comment George?

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26th Nov 2015 06:05

Buy to Lets

With George Osborne's continued attack on buy to let owners do we think he had a bad landlord whilst studying in Oxford?

I think the payment of CGT within 1month of a transaction is crazy - why not just have it done at the same time as the completion and have the tax deducted and paid by the solicitor?

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26th Nov 2015 08:41

auto-enrolment

Another change affecting employers is that the forthcoming hikes to minimum contributions under auto-enrolment will be delayed by six months each, so they'll now be in April 2018 and 2019 instead of October 2017 and 2018.

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26th Nov 2015 09:00

@JCresswell Tax - You've got me there

Thanks for pointing out the error, which has been amended in the text. I'm a relative latecomer to the T&S saga and interpreted the sentence to mean that it would be extended rather than repeating a decision that has already been made. It's not like this policy recycling hasn't happened before. Apologies.

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26th Nov 2015 09:07

Thanks John.

You had me worried there was further consultation there!

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26th Nov 2015 11:33

Oxymoron of OTS

When I qualified ( not saying when) Butterworths Yellow Book was a single volume. I agree that it now contains more legislation but looking at my bookshelf it now extends to six volumes !!!

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