On Wednesday 25th November 2015 the Chancellor of the Exchequer delivered a combined ‘Spending Review and Autumn Statement’ to the House of Commons, effectively his third major fiscal event of 2015. In his speech he set out the state of the economy and spending plans for the next four years.
He delivered a wide ranging statement covering public services, infrastructure and transport, homes, public finances and defences and the transition to Britain becoming a higher wage, lower welfare, lower tax society.
There was a complete reversal of his previously announced tax credits savings which he has now abandoned completely, rather than attempt to phase in the changes as many had demanded.
Another surprise announcement was that capital gains tax due on the disposal of second homes will be due 30 days after the sale, currently payable between 10 and 22 months following a disposal!
Below is our concise summary of the main content of the 2015 Autumn Statement:
Tax on Savings
- The band of savings income which is subject to the 0% starting rate will be frozen at its current level of £5,000 for the 2016-17 tax year.
- Individual Savings Account (ISA) investment limits will remain at their current level for 2016-17. The main ISA limit is £15,240 and the Junior ISA and Child Trust Fund limit is £4,080.
- The corporation tax rate is due to fall to 18% by April 2020 from the current 20%, as previously announced.
- The Small Business Rate Relief scheme is to be extended by a further year to 31 March 2017, helping over 600,000 smaller businesses.
- To simplify the administration of automatic enrolment for the smallest employers in particular, the next two scheduled increases of minimum contribution rate increases will be deferred by 6 months so that they are aligned to the tax year. These will therefore occur in April rather than October. Over 5.4 million individuals have already auto-enrolled into a pension.
Capital Gains Tax
- From April 2019 CGT on the disposal of certain residential property will be due 30 days following the date of completion of sale. This will be administered by the use of individual digital tax accounts in order for taxpayers to manage their tax online. Currently CGT is due on the 31 January following the end of the tax year in which the disposal takes place. Note this will not affect gains on properties which are not liable to CGT due to Private Residence Relief.
Inheritance Tax ~ Deeds of Variation
- Following a review announced in 2015 there are no plans to introduce new restrictions on how the use of deeds of variation can be used to avoid Inheritance Tax. The government will however continue to monitor their use.
- The basic state retirement pension from April 2016 will increase by £3.35 per week to £119.30. This represents the largest increase in real terms for 15 years.
- The new single-tier state pension due to be introduced from April 2016 will initially be set at £155.65 per week. Apparently around one-third of eligible retirees will not receive the full flat rate due to an insufficiency in national insurance contributions.
- From 1 April 2016 individuals purchasing buy-to-let properties and second homes will pay an extra 3% in stamp duty. Tax raised by this measure will be used to help first time buyers.
- The government is to introduce a new penalty of 60% of the tax chargeable where cases are successfully tackled under the General Anti Abuse Rule (GAAR).
- The government is to introduce a new criminal offence that removes the need to prove intent for the most serious cases of failing to declare offshore income and gains.
- Legislation is to be introduced allowing thedevolution of income tax in Wales to take place without a referendum.
- The Welsh block grant will reach almost £15 billion by 2019-20 while capital spending will rise by over £900m over 5 years
Further Advice and Support
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