Last week's joint Spending Review and Autumn Statement delivered by UK Chancellor George Osborne was relatively light on tax measures, but there are some key changes for private clients and corporates.
The Chancellor was expected to focus heavily on spending in his 25 November 2015 announcement, and indeed, there was little revealed in terms of tax changes or draft legislation.
Stamp duty increase
One big change for private clients to note is the additional 3% stamp duty that will be levied on second homes and buy-to-let investments.
In effect from 1 April 2016, the surcharge is expected to raise an additional £1bn for the Treasury by 2021. The government says it will consult on the policy detail, including on whether an exemption for corporates and funds owning more than 15 residential properties is appropriate. However, how successful this scheme will end up being remains to be seen, as I think for it be effective, the legislation will need to be quite complex.
From April 2019, the deadline for payment of Capital Gains Tax on the disposal of residential property is being brought forward to 30 days instead of 10 months after the tax year end, as is currently the case for UK resident taxpayers. Draft legislation will be published next year.
Prior to the general election, the Chancellor announced a review of deeds of variation, used to vary Wills, often for inheritance tax avoidance, including famously by the Miliband family. No changes to the rules on deeds of variation were announced last week – these will remain under review for the time being.
Draft legislation on dividend tax increases did not materialise, but as it is due to take effect from April 2016, I do expect the government will release something sooner rather than later.
The Chancellor announced legislation - now in effect – that is intended to stop tax avoidance by businesses through the selling or leasing of assets on non-market terms, to create capital allowances or avoid balancing charges. This planning could only be used in limited situations and so will have no impact for the majority of businesses.
Apprenticeship levy
Employers with a wage bill of more than £3m will find themselves impacted by this new charge, which comes in from April 2017.
Dubbed a "payroll tax", it will see 0.5% levied on company payrolls to fund three million apprenticeships. Businesses required to pay the levy will receive an allowance of up to £15,000 and they will be entitled to access government-funding training based on the number of apprentices they employ.
How we can help
There have been various changes announced in the past six months increasing the tax burden for investors in residential property. TMF Group can undertake a review of your residential property portfolio and prospective purchases, to demonstrate the impact of the tax changes occurring over time, and to allow you to consider possible planning. We will continue to keep you updated on UK tax developments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
