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:
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
State retirement pension will be set at:
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: