Here is everything you need to know about the Autumn Statement.
Ross Martin blogs:
As I found out myself, earlier this month, a ‘Spending Review’ is a rare sight, only occurring whenever a Government feels one is needed (the last one being in 2013). It’s purpose is to set out a five-year strategy of the Government’s spending plans, effectively spreading and reallocating £4trillion budget over the different departments.
I, for one, am thankful yesterday’s session was mostly spent on the Spending Review and less about the Autumn Statement. In tax circles, it is commonly joked (!) that the first decade of this century doubled the volume of tax legislation; if that is the case, the last couple years have sent it into Hyperdrive. We’ve had a bombardment of economic statements (this year hopefully topping out at three) and many major changes that have impacted clients, and which HMRC themselves have struggled to keep up with in implementation: PAYE Real-Time Information, Auto-Enrolment, reform to SDLT, Accelerated Payment Notices (APNs) and DOTAS, removal of tax relief on Goodwill … and the list goes on.
All underpinned by the ever-evolving mood that HMRC believe they are becoming the judge and jury in any matters.
I personally feel the small-medium enterprise sector in the UK needs some stability and fewer tax changes will be a start. (I mean, does the Office of Tax Simplification really do anything or is it just a room at Hogwarts?)
George’s Spending Review ostensibly delivered unexpected good news that we would return to a £10bn surplus by 2019/20. However, as a mathematician and a business adviser, a margin for error of just 0.25% (on £4trillion) is ludicrous to run any serious venture. Some apparent underlying revisions to forecasts have primarily delivered this good news and allowed a reversal to the previously condemned proposed cuts to Tax Credits. Other relevant tax changes were, therefore:
- SDLT (stamp duty) grabbed the tax headlines with an increase of 3% for buy-to-lets and second homes from 1st Apr 2016 – probably not a bad target to extract a little more income for the exchequer.
- Apprenticeship Levy – a biggie, raising over £2.5bn per annum, in what is effectively a 0.5% increase in employer’s NI for any payroll over £3m per annum.
- It was confirmed that the increased rate of tax on dividends will become effective from April 2016.
- A couple of high-profile proposed areas were notable by their absence. Entrepreneur’s Relief (10% tax rate on disposals) and IR35 (Service Companies) avoided any change.
- Hidden away, but with possible massive impact, is the current consultation on fundamentally changing tax relief to pension contributions. The Government will provide an update on this topic in the Budget 2016.
- There was warning of a future reduced 30 days time limit on paying CGT, but that is largely irrelevant in my opinion as most taxpayers pay such taxes out of the proceeds rather than alternative income.
- Diesel cars remain with a higher Benefit-in-Kind charge compared to petrol and not equalised as previously mooted.
- £800m has been pledged to HMRC to focus on evasion and non-compliance, deemed to be able to return £7.2bn.
- HMRC will, however, reduce its office count from 170 to 13 over the next 5 years – I am seriously hoping this will not worsen service levels any further.
There was, of course, many peripheral items which I have considered immaterial or irrelevant at this stage, but we will report back with more detail though in December when the draft legislation for the Finance Bill 2016 is released.
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