Summary points from the Autumn Statement
Dec 04, 2015
Budget & Autumn Statement
The Chancellor delivered his Autumn Statement on 25th November 2015. It’s fair to say it didn’t include any particularly surprising announcements, and was actually rather a bland affair. A few key points did come out of it which are worth noting:
Tax Credit U-turn
This was by far and away the most attention-grabbing announcement. On the back of the House of Lords blocking the government’s proposal to phase in cuts to working and child tax credits, the Chancellor has now announced that this legislation will not be brought in at all. Instead the rates and thresholds for tax credits will be frozen for 2016/17 at the 2015/16 levels.
Stamp Duty increase
The normal rate of Stamp Duty Land Tax (SDLT) will be increased by 3% from 1st April 2016, for the purchase of second homes and buy-to-let properties. This new rate will not apply to caravans, mobile homes or houseboats, nor to genuine property development businesses (who own more than 15 residential properties) or corporate purchasers. However the government intends to consult further on the detail of this policy, including whether or not this exemption for corporates is appropriate.
This latest focus on property investors follows on from a restriction of buy-to-let tax relief announced in the Summer Budget, which means that private landlords will no longer be able to deduct mortgage interest from their rental income. The increase in SDLT means that even landlords unaffected by the tax relief restriction (because they can buy properties to let without a mortgage), will still be discouraged from purchasing multiple properties to let or to hold as second homes, particularly in holiday areas like Cornwall.
Accelerated tax payment dates
Stamp Duty Land Tax: This is currently payable within 30 days of the completion of the purchase, and the SDLT return must be filed in the same period. However, from a date yet to be determined in 2017/18, the payment and filing period will be reduced to just 14 days from the completion of the property purchase.
Capital Gains Tax: CGT is normally payable by individuals by 31st January after the end of the tax year in which the gain arose. This gives the taxpayer between 10 and 22 months from receipt of the proceeds to calculate the tax due and pay it over to HMRC. From 6th April 2019 the payment date for any capital gains tax due on the disposal of a residential property will be only 30 days after completion, in line with the newly introduced rules for non-resident taxpayers. This latest rule will not affect residential properties that are exempt due to private residence relief.
Corporation Tax: As was announced in the Summer Budget, from April 2017 instalments of corporation tax will be payable in the 3rd, 6th, 9th and 12th months after the start of the accounting period, instead of in the 7th, 10th, 13th and 16th months.
The government has done another U-turn, and will now not charge IHT on the lump sum left to beneficiaries when an individual fails to withdraw their entire pension from their drawdown fund before death. This has been backdated to 6 April 2011.
Travel and subsistence
Workers employed through a personal service company will not see their tax relief disappear on their travel and subsistence expenses between home and work, as was previously feared. Travel costs will, however, be refused for temporary workers and any contractors already caught by IR35.
Company vans for private use
If employees are provided with a company van which they can use for private journeys, the taxable benefit for this increases for 2016/17 from £3,150 to £3,170. If the employer also provides an employee with private fuel, there will be an additional taxable benefit of £598.