George Osborne has just delivered his Autumn Statement. Much of his speech was taken up with his review of spending and management of the deficit and, with so many changes being presented in the Summer Budget it would, perhaps, have been surprising if there was much more now. However, there were some tax points and this is our initial analysis.
Stamp duty land tax (SDLT)
An additional 3% SDLT over and above the current rates will be charged from 1 April 2016 where residential property is bought as a second home or investment. There is to be an exemption for significant investors and the government is going to consult on the extent of that exemption: current thinking appears to be that companies or funds owning more than 15 residential properties should be exempt from the additional charge.
This measure was announced as a way of making cash investors contribute towards the creation of a level playing field between renters and owners of residential property. However, the window for purchases at current rates between now and April 2016 could encourage investors to crystallise any plans for buy to let acquisitions in the short term, possibly pushing up prices further.
Capital gains tax (CGT) - accelerated payment
In another raid on residential property investors, from April 2019, CGT due on the disposal of residential property will have to be paid within 30 days of completion. This sounds as though it will mirror the system now in operation for CGT payments by non-UK residents, although the government plans to publish draft legislation for consultation in 2016. The accelerated payments will not apply where the gain is covered by main residence relief, although it is not clear whether the entire gain needs to be exempt in order to avoid the new payment on account regime. It's assumed that this will apply to individuals (and possibly trusts) only, but we can expect the scope of the new arrangements to be clarified once the legislation/consultation is published.
Employees hired through umbrella companies and PSCs
Following the Summer Budget and subsequent consultation, relief for travel and subsistence expenses will be restricted for individuals working through intermediaries including personal service companies from 6 April 2016.
Inheritance tax - deeds of variation
Use of deeds of variation post death to redistribute an estate in a more tax efficient way have been under review. The government has now announced that no restrictions will be introduced but the use of deeds of variation will continue to be monitored.
New measures are to be introduced to reduce the scope for avoidance by businesses that dispose of plant and machinery, using an artificially low value for the plant to obtain increased capital allowances. This will be prevented where the tax advantage is one of the main purposes of the strategy.
A further measure will prevent creation of tax advantages by use of agreements to take over lease payments in return for tax free consideration.
If you would like to discuss any of the issues raised in the Autumn Statement with one of our tax partners, please contact Clare Munro or Phil Moss.