Submitted by Sestini & Co
| on Thu, 11/26/2015 - 15:31 | In Budget
, Tax planning and pensions
After much speculation about the contents of the Autumn Statement, George Osborne’s speech included a couple of surprises both in the items covered and anticipated measures that were only hinted at or omitted altogether.
Impact on buy-to-let landlords
As well as targeting small businesses, the government seems intent on increasing the cost of being a landlord.
The Budget announcement that tax relief on mortgage interest would be restricted was an unwelcome surprise and the news in the Autumn Statement that higher rates of Stamp Duty Land Tax (SDLT) would be charged on purchases of additional residential property has only compounded concerns for landlords.
From 1 April 2016, purchases of buy-to-let properties and second homes will be subject to Stamp Duty Land Tax at 3% above the current SDLT rate. It is mooted that there may be an exemption for corporates and funds owning more than 15 residential properties but this does not do anything to assist landlords with a smaller portfolio of properties.
Elsewhere in the Spending Review, the government seems to be aiming to give more people the opportunity to buy their own home but surely the increased costs to landlords will only mean that rental prices will increase and individuals renting property will have less money to save towards a deposit?!
Capital gains on buy-to-let properties
From April 2019 any Capital Gains Tax (CGT) due will be payable within 30 days of completion of disposal of a residential property (more bad news for landlords; individuals selling their principal private residence can claim exemption from CGT on their disposal).
There will also be a consultation on changes to the SDLT filing and payment process including a reduction in the filing and payment window from 30 days to 14 days.
Small businesses and contractors
Perhaps the most intense speculation before the Autumn Statement was regarding changes to the IR35 legislation (the tax and National Insurance contributions legislation applicable if you’re working for a client through an intermediary).
Despite concerns raised by contractors, it has been confirmed that the government will legislate to restrict tax relief for travel and subsistence expenses for individuals subject to the intermediaries’ legislation known as IR35.
This measure, so quickly following the changes to the taxation of dividends, appears to be another measure intended to minimise the tax incentive for individuals to incorporate. The exact details of this will be announced following a consultation period.
Fortunately there are still many other benefits to running your business through a company but it is a shame that this tax relief will be restricted when the reality is that most contractors face higher travel and subsistence costs than employees. We can only hope that the restriction will take these higher costs into account.
Following the campaign for the Government to reconsider the new dividend tax, many people were hopeful that there would be favourable amendments to the proposed taxation of dividends, unfortunately this subject was noticeably absent from the Autumn Statement.
Simplified tax payment dates?
As well as creating “simple, secure and personalised digital tax accounts” to simplify the tax system, HMRC seem to be moving towards regular payments of tax following a taxable event rather than waiting for an annual filing. They will launch a consultation to simplify the payment of taxes including whether to align payment dates and bring them closer to the point when profits arise.
Business Investment Relief
A welcome note was that there will be a consultation on how to change Business Investment Relief rules to encourage greater use of the relief to increase investment in UK businesses. The relief is currently available to individuals who are Resident in the UK but Not Domiciled and who would like to use overseas funds to invest in the UK and who would otherwise incur a charge for the remittance of these funds. This has already been a useful tool for some Non Doms and it is encouraging to hear that the rules may be broadened to assist more individuals in bringing funds into the UK to invest.
Striving towards a “high wage, low welfare” economy
With the new consultations being added to the consultation on Pensions and the taxation of Offshore Trusts, could it be too much to ask that we will eventually see some of the “certainty” that businesses and investors need to build the strong “high wage, low welfare” economy that we are all working for?
If you’d like to check the impact of the changes on your business or personal finances, call us on 01761 241 861 or email us today. We will be pleased to advise you or to invite you into our offices in Paulton, near Bristol and Bath, for a consultation.