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Autumn Statement

The robinson+co Tax Team has been listening to, and reading the associated notes about, the Spending Review and Autumn Statement which the Chancellor delivered earlier today.


The immediate reaction is one of bemusement: the Chancellor certainly fulfilled his remit of discussing how the Government is spending its money, but there was silence on where the money is coming from. The mooted increase to Fuel Duty – nothing; changes (which is of course a code word for “increases”) to national insurance – nothing; yet more changes to Entrepreneur’s Relief – nothing.


We are left with the feeling that the 2016 Budget in March will have to be a humdinger so that the Chancellor can balance the books. Alternatively, it may be that when the legislation for the 2016 Finance Act is published on 9 December, including the rules for the new dividend tax and mortgage interest relief on residential lettings (see our news index here for further details of these), the rules are stricter than we ever imagined.


(We will of course be issuing guidance on the new rules after the publication of the legislation on 9 December.)


To return to today, from a Cumbrian point of view three announcements were immediately interesting:

 

  • The 26 new Enterprise Zones will include one in Carlisle. Enterprise Zones get generous tax breaks such as 100% Capital Allowances, as well as other incentives such as 100% business rates relief and government support to roll out super fast broadband. It is disappointing that there are no Enterprise Zones in West Cumbria, but let’s hope that there will be a knock on effect of the Kingmoor Park investment.


  • There will be a £13 billion investment in transport in the Northern Powerhouse. Specifically mentioned are air links from Carlisle to Belfast, Dublin and Southend. Hopefully, an upgrade to the A66 and A69 roads by way of converting to dual carriageways, will also be revisited with this new slice of funding.


  • There will be a £250 million investment for small modular reactor development in Cumbria (and Sheffield and Manchester) as well as for wider nuclear research and development.


Those of us who have spent time at the Boulevard and Craven Park in Hull continued to be amused by the idea of Hull as a City of Culture – but perhaps the fact that the government has to fund the 2017 events with a £1 million donation supports our view that the juxtaposition “Hull” and “Culture” may be something of a contradiction in terms!


U-Turn for Tax Credits


The one thing no-one was happy about after the summer budget was the cut to Tax Credits, so this announcement by the Chancellor was definitely well received by everyone!


The income threshold will remain at £6,420 from April 2016, meaning claimants below this amount will get the maximum award and the income threshold for child tax credit only cases will remain at £16,105 for 2016/17.


However, as announced in the summer budget the income disregard will decrease from £5,000 to £2,500.


If you require any advice with regards to Tax Credits, please contact our tax team on 01900 603623, 01946 692423 and 019467 25808.



Residential Property / Buy to Let - Capital Gains Tax


With the government’s real focus on increasing the production of residential property for affordable housing, they haven’t missed the opportunity to make some subtle changes to both the capital gains tax position and stamp duty implications on residential property that is sold. 


Some specialists are saying that this could trigger a decline in the buy to let market on residential properties going forward, and that the government may be seen as indirectly influencing the value of properties for sale, with less demand for people acquiring second properties.


This measure is being achieved by imposing a higher rate of Stamp Duty Land Tax (SDLT) on second homes purchased with effect from 1 April 2016.  That is, a 3% SDLT “surcharge” will be added to the percentage paid for properties that are a second home to individuals.


The extra sting in the SDLT tail will be that from 2017, the timing allowed to remit the SDLT charge will reduce from the current 30 days to 14 days.


Could this be the end of “Homes under the Hammer”!!!!????


In addition, a more long term reform coming into effect in April 2019, will see the government aiming to bring into line the timing of when the money is received on the sale of residential property, and when the tax is due.  Under current circumstances, the capital gains tax on the disposal of residential property falls due anywhere between 10 months and 22 months after the sale is complete.  This situation often means the seller will have spent the proceeds and not have any spare cash for the tax due, or will forget about the tax altogether.


Therefore, rules will be introduced to ensure that any tax that is due on the sale of a residential property will be payable within 30 days of completion. 


Legislation on this will be released in due course, but Brett Bennett asks, “I wonder if this means solicitors are now going to be getting involved in completing tax returns for property sales?”

 


Good news for Auto Enrolment!


Auto Enrolment is well into the swing of things now, with 5.4 million people already auto enrolled and very few people opting out! The number of people that have opted out means that the total of people saving for their retirement is currently at its highest point.

 

The Chancellor has brought in a welcome change for Auto Enrolment within the Autumn Statement – the minimum amount of total contributions, that were due to be increased in October 2017 from 2% to 5% and October 2018 from 5% to 8%, will now be increased in April 2018 and April 2019 respectively, in line with the tax years.


Joanne, our Auto Enrolment specialist, says “this will be a well-received change by employers as it will delay the increase in their pension costs.”


If you have any queries about Auto Enrolment, Joanne can be contacted on 01900 603623 or joannehagreen@robinsonco.co.uk

 


State Pension Increase


The state pension for existing pensioners will increase by £3.35 per week, to £119.30 in April 2016.  The government has also pledged that an increase will be guaranteed in the subsequent years by the highest of inflation, earnings or 2.5%.


A reminder also that next year (i.e. April 2016) will see new pensioners fall under the new “flat rate” state pension of £155 per week.  However, not everyone will get this amount, with those who have a private or workplace pension being affected.



Making Tax Digital


With the latest announcements that HMRC are due to close the Workington and Carlisle offices – we can now see why when the target is to reduce costs of tax administration by £400 million by the end of April 2020.


Mr Osborne wants to bring us into a “digital age” by the end of this decade and to do this he plans to invest £1.3 billion to transform HMRC into “one of the most digitally advanced tax administrations of the world”.


This will result in self-employed people and landlords updating their information with HMRC on a quarterly basis via their own digital tax account – and this should be in place by April 2017 for all small businesses and individuals!


The plans are due to be published by the government in 2016 – so watch this (digital) space!!



Apprenticeship Levy


The Chancellor also announced an “Apprenticeship Levy” to help fund the ongoing investment in apprenticeships. This will be set as 0.5% of an employer’s “paybill” (whatever that is – it is not clear in the notes whether this means the total pay and national insurance paid by an employer, or just the monthly PAYE bill paid to HMRC) and will be paid each month. However, it will only affect the largest employers, being those with a total “paybill” of £3million.


 

Small Business Rates


Mr Osborne decided that small businesses will continue to receive 100% relief on business rates to April 2017 with around 405,000 small business benefiting from this.



Diesel Surcharge


It was announced today that company cars that are fuelled by diesel will continue to have the additional 3% surcharge added on to the CO2 base rate used when calculating the fuel and car benefit.  This measure has been confirmed as being applicable until April 2021.


 

As ever, if you have any queries about any the measures discussed in this article, or in the Autumn Statement generally, please do speak to your usual contact at robinson+co on 01900 603623, 01946 692423 or 019467 25808.


 


• These notes are not a full resume of the Spending Review and Autumn Statement issued on 25 November 2015



• All care has been taken in preparing this material. However no responsibility can be accepted for any losses arising to any person acting or refraining from acting as a result of this material



• Any comments are those of Victoria Bishop and Brett Bennett and do not necessarily reflect the views of
robinson+co


 





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