TW Ed summarises some of the key points from the 2014 Autumn Statement
The Chancellor’s Autumn Statement had a few surprises – some welcome, some not. Of course, for most of the announcements, we are still waiting for detailed legislation to consider the finer detail – although legislation was published today for some of the headline developments.
SDLT Savings - Almost certainly the most eye-catching and probably the most welcome development was the re-working of SDLT to make it conventionally progressive – to remove the current ‘slab’ basis and charge the higher percentages only above each relevant threshold. However, the ATED for £2M+ properties will get another hike from April 2015.
Entrepreneurs' Relief - Goodwill on Incorporation will no longer ‘count’ for ER when transferring to a 'related' company; also relief in the company on the acquisition of Goodwill from related party/ies will be postponed until eventual sale/disposal – both effective immediately for transfers / acquisitions on or after 3 December 2014 (draft legislation, etc., already published) Note that, even on later disposal by the company, relief will be restricted to a non-trading debit.
Miscellaneous losses will also be denied where there are relevant tax avoidance arrangements from 3 December 2014; relief will also be restricted to just miscellaneous income of the same category, from 2015/16.
Diverted Profits or “Google” Tax to counter the movement of profits to a low-tax jurisdiction, the government proposes a new 25% levy on such transferred profits, from 1 April 2015. This promises to be quite interesting in terms of implementation and practical effect, and probably court cases. Country-by-country reporting is also set to be introduced, although there is scant detail.
IHT/death – ISA savings on death will transfer to the surviving spouse and retain their favoured status for the widow/er.
The current IHT exemption for members of the armed forces killed (or in some cases just injured) on active service will be extended to cover the emergency services and humanitarian aid workers in emergency circumstances – notably for deaths on or after 19 March 2014.
Employers’ NICs – The £2,000 Employment Allowance against Employers’ National Insurance Contributions will be extended to Care and Support Workers. Also, Employers’ NICs up to the UEL will be completely abolished for apprentices aged under 25. Hmm, and here’s me thinking that ageism was illegal.
- Corporation Tax Relief – Children’s television programmes from 1 April 2015 at 25%
- Orchestra Tax Relief consultation for relief effective 1 April 2016.
- High-end television – consultation on whether to reduce minimum UK expenditure down from 25% to 10%
- R&D Tax Credits – Above The Line Credit to increase from 10% to 11%; SME rate to increase from 225% to 230%; but cost of materials incorporated into products which are sold will be excluded – all from 1 April 2015.
Corporate Debt – Late Paid Interest – the rules requiring relief to be recognised only when late interest is actually paid will be repealed, now they have a relatively narrow impact since they have focused on “tax haven” territories for the last few years. Applies automatically to new loans taken out on or after 3 December 2014; broadly, will affect adjustments in relation to pre-existing loans from 1 January 2016.
Offshore Tax Evasion – Strengthening of Civil Deterrents – including a new 50% penalty for moving hidden funds to try to circumvent international tax transparency agreements. But no further mention of the proposed “strict liability” criminal offence simply for having undeclared income..?
Single Settlement Nil-Rate Band – The government has apparently given up on the idea but will instead introduce new rules to target perceived avoidance using multiple trusts.
Personal Allowances for non-Residents – Likewise restricting availability of the tax-free Personal Allowance for non-residents has effectively been put on hold, at least until April 2017.
Small Business Rate Relief will again be extended, this time to 31 March 2016.
OTS Simplifications – The government says it has accepted 51 out of the OTS’s 58 simplifications and will publish further information in due course – something to watch out for.
Trivial Benefits in Kind Exemption – From April 2015 there will be a statutory exemption for trivial benefits in kind costing less than £50, but the £8,500 de minimis threshold will basically be abolished, from April 2016.
Closing Aspects of Enquiries – HMRC proposes to consult on yet another new HMRC power, this time to enable it to close certain aspects of an enquiry, while keeping other aspects open.
Numerous developments on pensions, and the remittance basis