We expected a “rabbit out of the hat” in the Autumn Statement, but the result was a dog that didn’t bark.
There will be no cuts in working or child tax credits for 2016/17 and contractors working through personal service companies in general won’t see tax-relief on travel disappear, as was feared. Only contractors already caught by IR35 and temporary workers will have their travel costs disallowed.
The big tax news for individual taxpayers is an additional 3% Stamp Duty Land Tax (SDLT) charge from 1 April 2016, and the proposed quarterly reporting for the self-employed and landlords from 2020.
To side step the legislated tax lock for national insurance the Government has invented yet another new tax: the apprenticeship levy. This will be set at 0.5% of the employer's payroll costs from 6 April 2017, to be collected via RTI. In effect it will amount to an increase in employers’ NIC.
But fear not; small employers won’t actually pay the levy. Every employer will get a £15,000 levy allowance, which will operate like the current employment allowance. Thus only employers with wage bills of over £3 million will pay the levy.
Another revenue raising wheeze recently discovered by George Osborne is the acceleration of tax payment dates. This works because the Government’s accounting is done on a cash basis with no pre-payments or accruals, so revenue brought forward is “extra money” for a particular tax year.
The following tax payment dates are to be brought forward:
From a date to be fixed in 2017/18: SDLT will be payable within 14 days of completion of property purchase – not 30 days as is currently the case.
From April 2019: CGT due on the disposal of residential property will be payable within 30 days of the completion date of the disposal – rather than by 31 January following the end of the tax year in which the disposal was made.
From April 2017: Instalments of corporation tax will be payable in the 3rd, 6th , 9th and 12 months after the start of the accounting period instead of in the 7th, 10th, 13th and 16th months. This was announced in the Summer Budget.
The ultimate stealth tax is of course a tax penalty. A whole bunch of new penalties were announced in the Autumn Statement, which I’ve summarised below under anti-avoidance. Other key Autumn Statement announcements are summarised under the date they are expected to apply from. Additional information on all these points will be available when the draft legislation is published on 9 December 2015.
From April 2016
No changes to the rates or thresholds for working or child tax credits, except the income rise disregard will reduce from £5,000 to £2,500.
Diesel supplement for company cars (3%) extended to 2020/21.
Small Business Rate Relief is extended for a year.
Supplementary 3% SDLT on residential properties – not relevant to Scotland.
State retirement pension will be set at:
- £119.30 p/w for existing pensioners;
£155.65 p/w for the new single tier pension for those who reach state pension age on and after 6 April 2016.
Tax-free childcare savings scheme will only be available where parents earn below £100,000, previously the earnings cap was to be set at £150,000. Each parent will have to work for a minimum of 16 hours/week to qualify.
SDLT payable within 14 days of completion of property purchase.
Apprenticeship levy imposed.
These measures come into effect for loans provided, assets acquired or transactions performed on and after 25 November 2015:
Where intangible assets are held through partnerships and LLPs which contain a company as a member (mixed partnership) there is a clash of tax rules for individuals and corporates, which allowed excess tax relief to be obtained. The law is to be changed to ensure the intangible asset is taxed under the intangible asset rules that apply for companies, when that asset is held by a mixed partnership. The Government will also review the intangible assets regime for all companies.
It is possible to manipulate the disposal values of plant and machinery to achieve excess balancing allowances or reduced or no balancing charges under the capital allowances rules. From 25 November on the disposal value will be adjusted for tax purposes to reflect the payment (in whatever form) actually received for the asset. This applies for corporate tax and income tax.
Where a company or individual takes on obligations under a lease, it may receive consideration from the party which previously held the lease. Such consideration has in some circumstances escaped tax. From now on where consideration is received (in any form), for taking on a lease that consideration will be taxable, even if the consideration is received by a connected person.
When the employee takes a non-repayable loan from his employer, or from a trust set up by the employer, in place of normal pay, the arrangements are referred to as disguised remuneration. The Government legislated against such schemes in 2011 and has recently won a high profile tax case against the former Rangers FC.
It has now given notice that any further attempts at disguised remuneration schemes will be closed down with effect from 25 November 2015 by the use of retrospective legislation.
As part of its war against tax evasion the Government plans to introduce new criminal offences and penalties in the following areas:
- civil penalties for offshore tax evaders and for those who help offshore tax evaders;
- criminal offence of tax evasion involving offshore income and gains;
- criminal offence for companies who fail to prevent their employees or agents from facilitating tax evasion by individuals or entities;
a requirement to correct past offshore non-compliance with tax rules and a civil penalty for failure to make the correction.