Autumn Statement 2015 Round-Up
The biggest news from the Autumn Statement was the Chancellor's announcement that the rates and thresholds for tax credits will be frozen for 2016/17 at the 2015/16 levels. There is one exception - the disregard of rising income is to be brought in line with the disregard for falling income. Both will be set at £2,500 for 2016/17.
Stamp Duty Land Tax Increases
The Chancellor has continued his campaign to bring misery to property investors, with the latest attack on landlords being a proposed 3% increase in SDLT. This is because the cash investors are not affected by the mortgage interest restriction, so discourage these cash buyers, the Chancellor has created an additional SDLT charge of 3% on second or further homes (costing over £40,000).
In my opinion, this won't achieve the desired effect and it won't discourage the property investors with large portfolios, as it does not affect corporate structures and the cash buyers, who are in a strong position, will just drive the price down. I think it will affect the landlords with one property or considering investing in one property as a pension, as the Government has put too many obstacles in the way now.
Capital Gains Tax
CGT is normally payable by individuals by 31 January after the end of the tax year in which the gain arose. This gives the taxpayer between 10 and 22 months from receipt of the proceeds to calculate the tax due and pay it over to HMRC. From 6 April 2015 non-resident taxpayers have had a shorter time frame in which to report the sale of UK residential property and pay the tax due - only 30 days from the completion of the disposal. HMRC now propose to extend the 30 day reporting and CGT payment deadline to all UK taxpayers who make taxable gains when selling residential properties for disposals on or after 6 April 2019.
Car and Fuel Benefit Charges
Diesel company cars currently carry a 3% supplement on the percentage of list price used to calculate the taxable benefit. This diesel supplement was to be removed from 6 April 2016, but it will now stay in place until 2020/21.
Employees and directors with company cars, and who also have some or all of their private fuel paid for by their employers, are subject to the fuel benefit charge - determined by multiplying a notional list price by the appropriate percentage for the car, based on its CO2 emissions. The car fuel notional list price will increase from £22,100 to £22,200 with effect from 6 April 2016. For a company car emitting between 111 to 115g CO2 per km, the scale charge would be 20% of £22,200 and this would result in taxable fuel benefit of £4,440 and £1,776 income tax for a 40% taxpayer. At 11p per mile the employee would need to drive 16,145 private miles to make having private fuel paid for worthwhile.
NI Rates Frozen For 2016/17
There will be no increase in the rates of national contributions (NICs) for employers, employees nor the Class 4 rate for the self-employed for 2016/17, although the Upper Earnings Limit for employee contributions and Upper Profits Limit for Class 4 contributions will be increased to £43,000, in line with the higher rate tax threshold.
Employees’ contributions will be payable at 12% on earnings between £155 per week and £827 per week and 13.8% employers contributions will start at £156 per week. The employment allowance increases to £3,000 for 2016/17 and will continue to be deductible from employers’ NIC, although it will no longer be available to one man companies.
But...Larger Employers Will Pay A New Apprenticeship Levy From 2017
A new apprenticeship levy will be introduced from 6 April 2017. Although all employers will be required to pay this new levy, set at 0.5% of their annual payroll cost, each employer will also have an annual credit equivalent to £15,000 to set against the levy, which means only the largest employers with payrolls of £3 million or more will actually pay the levy. Based on an average salary, this means that only employers with more than around 100 to 120 employees will be affected. It is not clear at this stage as to what is meant by payroll.
Employers who take on apprentices will receive vouchers funded by the apprenticeship levy to set against the cost of those apprentices.