Once upon a time, the government’s Autumn Statement only dealt with the country’s economic position and strategies to improve it..... and it was called the 'Pre-Budget Report'.
Now it has become an intrinsic part of the overall Budget process and gives the government a chance to unveil some of its proposed tax changes within the context of the overall economic strategy.
Whilst there will, inevitably, be new proposals made in the Budget 2016, the Autumn Statement contains information on tax and pensions proposals that is important for financial planners to know. With the government still under constant pressure to improve public finances, (and the climb down on tax credits and the increases to the defence budget increase the difficulty of this challenge) the importance of taxation to the overall "business plan" of 'UKPlc' cannot be underestimated.
The Chancellor's Autumn Statement focused, in their words, on "protecting economic and national security".
One of the most talked about highlights was the rebuttal by the House of Lords of the tax credit reforms which in effect forced the Chancellor to hold back his plans in this area. Commentators believe that the proposed tax credit cuts will somehow be clawed back with the implementation of universal credit. Whilst the income threshold for tax credit taper remains unchanged at £6,420 , one wonders how this taper will be effected with the new digital proposals for collection of taxes , designed to bring tax receipts forward but could also trigger the implementation of the taper before a complete trading/ reporting year.
There were no details from the pension tax relief consultation so we suspect a late night on Budget Day in 2016.
There were of course many other highlights for financial planning and wealth management. A full copy of the HM Treasury Spending Review and Autumn statement is available to download at the bottom of this article.
But for now...
Capital Gains Tax
Buy to Let
In addition to the changes in the taxation of the rental income from buy to let properties, anyone wishing to purchase a residential property for investment or a second home will need to pay additional stamp duty at 3% above the current Stamp Duty Land Tax rates. This comes into effect on 1st April 2016.
The higher rates will not apply to companies or funds making significant investments in residential property. The government will issue a consultation on the policy detail.
Tax Avoidance Evasion and Compliance
The government will introduce a new penalty of 60% of the tax due to be charged in all cases successfully tackled by the General Anti Abuse Rule (GAAR) and will make small changes to the GAAR’s procedure to improve its ability to tackle marketed avoidance schemes.
Tax administration - Making tax digital
The government will invest £1.3 billion to transform HMRC into one of the most digitally advanced tax administrations in the world. 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, reducing 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 per year. The government will publish its plans to transform the tax system shortly and will consult on the details in 2016.
This will also bring the receipts of tax forward but one wonders how this will impact the self employed in receipt of tax credits. Will it bring the level of income for tax credit taper, currently £6,240, forward meaning that self employed people could loose their tax credit mid accountancy period.
And finally ..... more details are expected soon on a number of measures that were announced by the Chancellor in the July Summer Budget, but which were not mentioned in this Spending Review.
If you would like a review of your personal circumstances and weather you are investing in a tax efficient way ( and I emphasise tax efficient not tax avoidance ) ensuring you are utilising your reliefs, your investments are performing as expected and your financial plans underpinned with adequate protection - please do not hesitate to get in touch. You can use all the contact methods at the top of the web page or just complete and enquiry form below.
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Whilst reading the blog articles please be aware of the following:
Welcome to the blog curated by Jill Turner. The pages are not intended to give advice, they are just the real life stories from a real life financial planner and the wonderful people I get to meet.
I want the pages to be engaging, informative and purposeful.
The information contained within this blog is based on our understanding of current government proposals and tax
law, both are liable to change in the future.
Jill Turner is a member of the Personal Financial Society