News

George Osborne delivered his Autumn Statement to the House of Commons, speaking for just over an hour, focusing mainly on the public spending review. The Chancellor announced that this government aimed to achieve a £10bn surplus and reduce overall government debt by 2019/20. The focus of the budget was on protecting security and education budgets, increasing NHS spending and increasing spend on infrastructure.

The highlights of the statement are set out below:

1. Individuals

• No changes to Income Tax rates or bands previously announced.
• The starting rate of savings tax of 0% will apply to the first £5,000 of savings for 2016/17
• Tax credit cuts announced in the previous budget are to be scrapped completely after the government listened to concerns about phasing in such cuts.
• State Pension rises by £3.35 per week to £119.30 from April 2016.
• Childcare support extended to allow 30 hours free childcare to parents of 3 and 4 year olds working over 16 hours per week and with income of less than £100k, from 2017.
• All individuals to have their own online digital tax account by 2019
• Government to announce schemes to help first time buyers on to the market, including Shared Ownership Scheme.
• The government is making it harder to claim compensation for exaggerated whiplash claims, which could see drivers’ insurance costs fall by £40 - £50 a year.
• Government to legislate to ensure no charge to IHT arises where a pension fund member designates funds for drawdown but does not draw all funds before death. This will be applied to deaths on or after 6 April 2011.

2. Business

• No change in Corporation Tax previously announced, meaning that the main rate of Corporation Tax will be cut to 18% by 2020.
• Additional powers devolved to NI Executive allows them, if conditions are met, to cut Corporation Tax to 12.5% in 2018.
• The Northern Ireland Block Grant will increase by 12% to £11bn by 2019/20.
• By 2020, the majority of businesses will be required to keep track of their tax affairs digitally and update HMRC at least quarterly.
• The next 2 Automatic enrolment minimum contribution rates delayed by 6 months to align with start of tax years.
• New apprenticeships levy of 0.5% on employee costs from April 2017. However businesses will have an allowance of £15k, meaning that this levy will not apply unless apprentice costs total at least £3m.
• Diesel supplement on Company Car Tax remains until 2021.
• Farmers averaging period extended from 2 years to 5 years as of April 2016, with farmers having the option of either.
• A Tax charge is not to be applied to loans or advances made by close companies to charity trustees for charitable purposes. This applies to qualifying loans made on or after 25 November 2015.

3. Capital Gains Tax

• CGT on residential property to be paid within 30 days of disposal from April 2019
• No changes announced to Entrepreneurs’ Relief.

4. Stamp Duty

• 3% rise in Stamp Duty on buy to let properties and second homes (above £40k) from April 2016. The higher rate will not apply to corporates making significant investments in residential property.
• The government will consult in 2016 on reducing the SDLT filing and payment window from 30 to 14 days from April 2017.

5. Anti avoidance

• £800m extra set aside to tackle tax avoidance
• Tax reliefs will be restricted for workers engaged in umbrella or personal service companies
• Government will exclude all energy generation activities from Venture Capital Schemes by April 2016
• Company distributions to be discussed in consultation paper in order to prevent opportunities for income to be converted to capital.
• Legislation to be introduced to prevent companies from artificially lowering disposal values of plant & machinery for capital allowances purposes and make any payment received for agreeing to take responsibility for lease related payments subject to tax as income.