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Wednesday, 25 November 2015 16:21

Autumn Statement 2015

Autumn Statement 2015

The Chancellor, George Osborne, set out government spending plans up to 2020.

This was a massive Autumn Statement and Spending Review with lots of detail, much of which has only emerged since the Chancellor sat down. In summary, the Autumn Statement and Spending Review outlined £20bn of cuts to Whitehall budgets and £12bn to welfare, and made a number of changes to the tax system to partially pay for the increased spending in some departments and to tackle the overall budget deficit.

Headlines included:

Pledging almost £7bn to make housebuilding a priority, with more than 400,000 "affordable homes" to be built in England.

Plans to mitigate the effect of tax credit cuts.

The Chancellor also hopes to raise nearly £8bn with a further crackdown on tax avoidance.

The specific tax measures announced

There will be an investment in a new digitally advanced tax administration, so that every individual and every small business will have their own digital tax account by the end of the decade, in order to manage their tax online.

From 2019, once those accounts are up and running, capital gains tax is to be paid within 30 days of completion of any disposal of residential property (there is an issue here where there is a contract that becomes unconditional and there is delayed completion, or where the marginal rate of tax changes during the year).

There is a new measure which will exempt loans or advances made by close companies to trustees of charities for charitable purposes from the tax charge applied under the loans to participators rules.

There are amendments that clarify when intangible fixed assets held by a partnership come within the intangible fixed asset rules. These rules will ensure that such assets are treated appropriately, as either assets to which the intangible fixed asset rules apply or assets within the capital gains code, when calculating the chargeable profits allocated to a corporate partner.

A new measure will affect businesses which seek to obtain tax advantages by either manipulating disposal values leading to excess capital allowances or receiving a consideration in a non-taxable form in return for agreeing to take over tax deductible lease payments.

There is to be a new rate of Stamp Duty that will be 3 per cent higher on the purchase of additional properties like buy-to-lets and second homes. It will be introduced from April next year and corporate property development will not be affected.

Sixth Form Colleges will be able to become Academies, so they no longer have to pay VAT.

The apprenticeship levy on larger employers announced in the Summer Budget will be introduced in April 2017. It will be set at a rate of 0.5% of an employer's paybill. Each employer will receive an allowance of £15,000 to offset against their levy payment. This means that the levy will only be paid on any paybill in excess of £3 million and that less than 2% of UK employers will pay it. The levy will be paid through PAYE.

Venture Capital Schemes: toensure the tax-advantaged venture capital schemes continue to provide effective and sustainable support to small and growing businesses, the eligibility criteria of the schemes will be changed to exclude all energy generation activities and there will be further exploration of options to introduce increased flexibility for replacement capital within the schemes.

GAAR: There will be 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 there will be small changes to the GAAR's procedure to improve its ability to tackle marketed avoidance schemes.

New rules will be introduced to stop avoidance of stamp tax where 'deep in the money' options are used to transfer shares to a depositary receipt issuer or clearance service.

Disguised remuneration: to reduce opportunities for income to be converted to capital to gain a tax advantage, there will be a consultation on the company distributions rules, and the Transactions in Securities rules will have a Targeted Anti-Avoidance Rule.

Conclusion

It doesn't appear that there are any massive changes to the tax code, other than the very specific changes aimed at tackling avoidance. We await with interest the consultation on disguised remuneration which is probably the area that will most impact our clients.

 

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