You may find this interesting … the Chancellor’s comments, with some Gillespie observations on how these changes may impact on our clients:
As in the case of every budget or spending review, last week’s mixed giving and taking back will appeal to some (Tax credit claimants), and disappoint others (particularly SNP followers).
Gillespie were disappointed that we did not see the Chancellor reversing his previously stated intentions to limit Dividend Tax Credit relief, nor to slow down his programme for HMRC pushing ahead with Digital Tax Accounts. (We fear the worst.)
However, his continued desire to clamp down on several Tax avoidance schemes, particularly Corporate Tax avoiders and evaders seem fair to us.
On Capital Gain legislation changes … Gillespies have coincidentally for the last 10 years been advising clients expecting a Capital Gains Tax bill in the January of the year after disposal, not to wait for the official demand but volunteering to pay the inevitable, liability up-front from the sole proceeds when received. Accordingly George Osborne’s payment on account enforcement within 30 days merely makes our advice now compulsory … so no big deal there.
Overall we hope that this Autumn Review … delivered exactly a month … before Christmas … finds all our clients advantaged in some respect. However, but remain very cautious about Digital Tax Accounts, and the effect it will have to our clients, in particular to pensioners everywhere. Here it is;
Non-UK residents with UK residential property
The capital gains tax (CGT) computations required by non-residents on the disposal of UK residential property will be changed. With retrospective effect from 6 April 2015, a double charge that may occur will be removed and an omission will be corrected with effect from 25 November 2015. HMRC will be given powers to prescribe circumstances when non-residents are not required to make a CGT return and CGT will be added to the list of taxes that the government may collect on a provisional basis.
CGT payment on account on residential property
From April 2019, a payment on account of any CGT due on the disposal of residential property will be required within 30 days of the completion of the disposal. This will not affect gains on properties that are not liable for CGT because of private main residence relief. Draft legislation will be published in 2016.
Inheritance tax and drawdown pensions
There will be legislation to ensure a charge to inheritance tax will not arise when a pension scheme member designated funds for drawdown but does not draw all of the fund before death. This will be backdated to apply to deaths on or after 6 April 2011.
Deeds of variation
“I can confirm that next year the basic state pension will rise by £3.35 to £119.30 a week.” George Osborne
After the review announced in the March budget 2015, there will be no new restrictions on how deeds of variation can be used for tax purposes but the government will continue to monitor their use.
Pensions tax relief consultation
The government launched a consultation in the Summer Budget 2015 on the system of pension’s tax relief. The government is considering the responses and will publish its proposals in the 2016 Budget.
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.
The government remains concerned about the growth of salary sacrifice arrangements and is considering what action, if any, is necessary. Further evidence will be gathered, including from employers, on salary sacrifice arrangements to inform its approach.
Company car tax diesel supplement
The three percentage point differential for company car taxation between diesel and petrol cars will be retained until April 2021. The original intention was to abolish it from April 2016.
Employment intermediaries: travel and subsistence
“It’s a huge reform to raise the skills of the nation and address one of the enduring weaknesses of the British economy.” George Osborne
There will be a restriction to the tax relief for travel and subsistence expenses for workers who are engaged through an employment intermediary, such as an umbrella company or a personal service company. This was previously announced in the Summer Budget 2015. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediary’s legislation applies. This change will take effect from 6 April 2016.
TAX ADMINISTRATION AND SIMPLICIATION
Making tax digital
“We’re going to build one of the most digitally advanced tax administrations in the world.” George Osborne
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. This should reduce 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 a year. The government will publish its plans to transform the tax system shortly and will consult on the details in 2016.
Simple assessment of tax
The government will publish draft legislation for a new, simpler process for paying tax. This will be used for taxpayers in self-assessment who have simple tax affairs where HMRC already holds the data it needs to calculate the tax liability, and where existing payment processes are not available. Taxpayers will be sent a calculation that will be a legally enforceable demand for payment, and taxpayers will come into effect in the 2016/17 tax year.
TAX AVOIDANCE, EVASION AND COMPLIANCE
Offshore tax evasion
The new criminal offence will be introduced which will remove the need to prove intent for the most serious cases of failing to declare offshore income and gains.
The civil penalties for deliberate offshore tax evasion will also be increased. There will be a new penalty linked to the value of the asset on which tax was evaded and more public naming of tax evaders. Civil penalties will be introduced for those who enable offshore tax evasion, including public naming of those who have enable the evasion.
“We’re reinvesting an extra £800 million in the fight against tax evasion – an investment with a return of almost ten times in additional tax collected.” George Osborne
Corporates failing to prevent tax evasion
There will be a criminal offence for corporates that fail to prevent their agents from criminally facilitating tax evasion by an individual or entity.
Serial tax avoiders
There will be new measures for those who persistently enter into tax avoidance schemes that are defeated by HMRC. These include a special report requirement and a surcharge on those whose latest return is inaccurate because of the use of a defeated scheme. The names of such avoiders will be published and those who persistently abuse tax relief will be subject to restrictions on accessing certain reliefs for a period. The government is also widening the promoters of tax avoidance schemes (POTAS) regime, by including promoters whose schemes are regularly defeated.
Capital allowances and leasing
With effect from 25 November 2015, legislation will counter two types of avoidance involving capital allowances and leasing. These changes will prevent companies from artificially lowering the disposal value of plan and machinery for capital allowances purposes. They will also make any payment subject to tax as income where it is received for agreeing to take responsibility for tax deductible lease-related payments.
“We said £5 billion would come from the measures on tax avoidance, evasion and imbalance.” George Osborne