UK Chancellor’s Budget 2015: Highlights for Social Housing

UK Chancellor’s Budget 2015: Highlights for Socia...

On the whole, the Budget framed a generally positive message – delivering a ‘truly national recovery’ based on growth and fairness.

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This focus on fairness includes provisions to:

  • Help families;
  • Reward savings; and
  • Support those looking to buy their first home.

The introduction of the Help to Buy: ISA scheme is the major initiative to encourage the housing market, but there were a number of other specific provisions to aid the housing sector announced in the Budget, setting out further progress on the government’s commitments to ambitious housing and regeneration projects.

The Budget announces the designation by government of the first 20 Housing Zones outside of London and the commitment to continue to work with a further 8 shortlisted areas. Backed by government technical support and planning funding, brokerage and investment, these Zones could support up to 45,000 new homes.

In a bid to support brownfield development, the government launches a consultation into the compulsory purchase regime to make it clearer, faster and fairer for all parties.

The Budget has confirmed that the changes to the Stamp Duty Land Tax treatment of shared ownership properties announced in the Autumn Statement 2014 would take effect from the date on which the Finance Bill 2015 received Royal Assent.  Royal Assent was given on 26 March.

Following an earlier consultation, the Homes and Communities Agency will amend guidance and model leases to help streamline the sales process for shared ownership properties in outright ownership. The government will also launch a wider review into shared ownership.

In addition to the wider measures outlined above, the government continues to work and consult in relation to specific geographical areas to support the construction of new homes.

Below is a summary of key taxation proposals which could affect entities operating within the social housing sector arising from the Budget Report delivered on 18 March 2015.

 

Help to Buy ISA

This measure has been introduced in recognition of the impact that the low interest rate environment has had on the ability of first time buyers to get on the housing ladder. The scheme will work by providing a government bonus to each person who has saved into a Help to Buy: ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum bonus of £3,000 on £12,000 of savings.

 

Corporation Tax

It is common for charities to own non-charitable subsidiary companies; the following announcements made in the Budget will be applicable to such companies and may therefore be of interest to charities.

Rate of corporation tax

The current main rate of corporation tax is 20% (as of 1 April 2015), bringing it in line with the small companies’ rate of corporation tax which remains at 20%.

Capital allowances

In the 2014 Budget there was an announcement that the Annual Investment Allowance limit would fall from £500,000 to £25,000 from 1 January 2016. The government has announced in the 2015 Budget their intention to review this but there is currently no indication of what the allowance may change to.

Anti-avoidance measures

A number of anti-avoidance provisions have been finalised and are now to be legislated for, such as diverted profits tax rules, country by country reporting under BEPS (Base Erosion Profit Shifting), and the prevention of contrived arrangements to refresh corporation tax losses.

 

We are very pleased to note that government have listened to representations made by KPMG, and others, and have excluded gift aid payments from the diverted profits tax legislation.

 

Stamp Duty Land Tax (SDLT)

Treatment of shared ownership properties

As announced in the Autumn Statement 2014, it has been confirmed that the government will extend the SDLT multiple dwellings relief to include superior interests in residential property, such as shared ownership. This will apply where the transaction is part of a lease and leaseback arrangement, if acquired from a qualifying body such as a housing association.

 

The change took effect from the date on which the Finance Bill 2015 received Royal Assent (26 March 2015).

 

Extension of the Annual Tax on Enveloped Dwellings (ATED) to properties worth over £500,000

 

ATED was introduced from 1 April 2013 and currently applies to UK residential property valued at more than £2 million owned by companies, some partnerships, and other corporate vehicles. From 1 April 2015 a new band comes into effect for properties with a value over £1 million while the threshold will reduce to £500,000 with effect from 1 April 2016.

 

As announced in the Autumn Statement 2014, rates of ATED for properties valued at more than £2 million have been increased by 50% plus inflation.

 

An ATED return will need to be completed for each property over the threshold. HMRC do however permit one return per company where multiple properties are held and the same relief is being claimed. However, there is a carve out for charities holding properties for qualifying charitable purposes, and in these circumstances no return is needed.

 

The Treasury acknowledge that the new measures will create an additional administrative burden, and the government has given a commitment to consult on the possible options to simplify the administration of ATED for property businesses eligible for the reliefs.

 

VAT

Registration and deregistration thresholds

With effect from 1 April 2015, the VAT registration and deregistration thresholds have increased as follows:

 

  • The taxable turnover threshold (which determines when a person must register for VAT) will be increased from £81,000 to £82,000; and
  • The deregistration threshold (which determines when a person may deregister for VAT) will be increased from £79,000 to £80,000.

 

Income and Employment Tax

Savings income

A new Personal Savings Allowance

The government will introduce an allowance from 6 April 2016 to remove tax on up to £1,000 of savings income for Basic Rate taxpayers and up to £500 for Higher Rate taxpayers. Additional Rate taxpayers will not receive an allowance. As part of these reforms HM Revenue and Customs (HMRC) will introduce automated coding out of savings income that remains taxable through the Pay As You Earn system from 2017 to 2018, with pilots starting in Autumn 2015.

Making Individual Savings Accounts (ISAs) more flexible

Individuals will be able to withdraw and replace money from their cash ISA in-year without it counting towards their annual ISA subscription limit, and the government will change the rules this autumn following technical consultation with ISA providers.

Tax rates and allowances

Income Tax Personal Allowance in 2016/17 and 2017/18

The personal allowance will be increased to £10,800 for 2016/17 and £11,000 in 2017/18. The Basic Rate limit will be increased to £31,900 for 2016/17 and £32,300 for 2017/18. As a result, the Higher Rate threshold will be £42,700 in 2016/17 and £43,300 in 2017/18.

 

From 2016/17, there will be one Income Tax personal allowance regardless of an individual’s date of birth.

 

The National Insurance Upper Earnings and Upper Profits Limits will increase to stay in line with the Higher Rate tax threshold.

Umbrella companies and employment intermediaries

The Autumn Statement 2014 announced that the government would review the growing use of overarching contracts of employment that allow some temporary workers and their employers to benefit from tax relief for home-to-work travel expenses, relief not generally available to other workers.

 

The government’s view is that the status quo is unfair, and as a result of the review, the rules will be changed to restrict travel and subsistence relief for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, and under the supervision, direction and control of the end-user. This will take effect from April 2016 following a consultation on the detail of the changes. The government’s intention is to level the playing field between employment businesses that seek to lower their costs by using these arrangements and those that do not, however the extent to which this measure will adversely affect those individuals who have been able to claim travel and subsistence relief in this manner up until now remains to be seen.

 

Stakeholders have also raised concerns that individuals do not understand how their take-home pay is affected by these arrangements. The government wants employment intermediaries to provide workers with greater transparency on how they are employed, and what they are being paid. The Department of Business Innovation and Skills will consult on these proposals on transparency later this year.

Employment intermediaries: penalties

As announced in the Autumn Statement 2014, the government will make a minor amendment to correct legislation underpinning the penalty regime for the late filing or non-submission of quarterly returns from employment intermediaries. This will take effect from 6 April 2015.

Cars, fuel and van benefits

Company car tax rates for 2019-20

The appropriate percentage of list price subject to tax will increase by 3% for cars emitting more than 75 grams of carbon dioxide per kilometer (gCO2/km), to a maximum of 37%, in 2019-20. There will be a 3% differential between the 0-50 and 51-75 gCO2/km bands and between the 51- 75 and 76-94 gCO2/km bands.

Company car tax rates for 2017-18 and 2018-19

As announced in the Budget 2014, the appropriate percentage of list price subject to tax will increase by 2% for cars emitting more than 75 gCO2/km, to a maximum of 37%, in both 2017-18 and 2018-19. In 2017-18 there will be a 4% differential between the 0-50 and 51-75 gCO2/km bands and between the 51-75 and 76-94 gCO2/km bands. In 2018-19 this differential will reduce to 3%.

Fuel benefit charge

From 6 April 2016 the Fuel Benefit Charge multiplier for both cars and vans will increase by RPI.

Van benefit charge

From 6 April 2016 the main Van Benefit Charge (VBC) will increase by RPI. As announced at Budget 2014, the government will extend VBC support for zero emission vans to 5 April 2020 on a tapered basis.

Employment status

Office of Tax Simplification (OTS) review of employment status.

The government has welcomed the publication of the OTS’s significant report on employment status and will respond to the recommendations made in the next Parliament.

Class 2 National Insurance contributions (NICs)

As part of the planned reforms to tax administration, the government will abolish Class 2 NICs in the next Parliament and will reform Class 4 to introduce a new contributory benefit test. The government will consult on the detail and timing of these reforms later in 2015.

Pensions

Annuities

The government will legislate from April 2016 to allow people who are already receiving income from an annuity to agree with their annuity provider to assign their annuity income to a third party in exchange for a lump sum or an alternative retirement product.

Lifetime allowance for pension contributions

The government will reduce the lifetime allowance for pension contributions from £1.25 million to £1 million from 6 April 2016. Transitional protection for pension rights already over £1 million will be introduced alongside this reduction to ensure the change is not retrospective. The lifetime allowance will be indexed annually in line with CPI from 6 April 2018.

Simplification

Making tax easier: the end of the tax return

The government will transform the tax system over the next Parliament by introducing digital tax accounts to remove the need for individuals and small businesses to complete annual tax returns. Further details on the policy and administrative changes needed to deliver this will be published later in 2015.

Making tax easier: new payments process

The government will consult over the summer on a new payment process to enable tax and National Insurance contributions (NICs) to be collected through digital accounts instead of self-assessment.

 

Duties

Alcohol duty rates

From 23 March 2015 the duty rates on general beer, sprits and lower strength cider were reduced by 2%. The duty rate on low strength beer was reduced by 6% and the total duty rate on high strength beer was reduced by 0.75%. The duty rate on high strength still cider was reduced by 1.3% and the duty rates on wine below 22% alcohol by volume and high strength sparkling cider were frozen.

Tobacco duty rates

As announced in the Budget 2014 duty rates on tobacco products increased by 2% above RPI. These changes came into effect from 6:00pm on 18 March 2015.

Fuel duty

The government will cancel the RPI inflation fuel duty increase of 0.54 pence per litre scheduled for 1 September 2015.

Help to Buy ISA

This measure has been introduced in recognition of the impact that the low interest rate environment has had on the ability of first time buyers to get on the housing ladder. The scheme will work by providing a government bonus to each person who has saved into a Help to Buy: ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum bonus of £3,000 on £12,000 of savings.

 

Corporation Tax

It is common for charities to own non-charitable subsidiary companies; the following announcements made in the Budget will be applicable to such companies and may therefore be of interest to charities.

Rate of corporation tax

The current main rate of corporation tax is 20% (as of 1 April 2015), bringing it in line with the small companies’ rate of corporation tax which remains at 20%.

Capital allowances

In the 2014 Budget there was an announcement that the Annual Investment Allowance limit would fall from £500,000 to £25,000 from 1 January 2016. The government has announced in the 2015 Budget their intention to review this but there is currently no indication of what the allowance may change to.

Anti-avoidance measures

A number of anti-avoidance provisions have been finalised and are now to be legislated for, such as diverted profits tax rules, country by country reporting under BEPS (Base Erosion Profit Shifting), and the prevention of contrived arrangements to refresh corporation tax losses.

 

We are very pleased to note that government have listened to representations made by KPMG, and others, and have excluded gift aid payments from the diverted profits tax legislation.

 

Stamp Duty Land Tax (SDLT)

Treatment of shared ownership properties

As announced in the Autumn Statement 2014, it has been confirmed that the government will extend the SDLT multiple dwellings relief to include superior interests in residential property, such as shared ownership. This will apply where the transaction is part of a lease and leaseback arrangement, if acquired from a qualifying body such as a housing association.

 

The change took effect from the date on which the Finance Bill 2015 received Royal Assent (26 March 2015).

 

Extension of the Annual Tax on Enveloped Dwellings (ATED) to properties worth over £500,000

 

ATED was introduced from 1 April 2013 and currently applies to UK residential property valued at more than £2 million owned by companies, some partnerships, and other corporate vehicles. From 1 April 2015 a new band comes into effect for properties with a value over £1 million while the threshold will reduce to £500,000 with effect from 1 April 2016.

 

As announced in the Autumn Statement 2014, rates of ATED for properties valued at more than £2 million have been increased by 50% plus inflation.

 

An ATED return will need to be completed for each property over the threshold. HMRC do however permit one return per company where multiple properties are held and the same relief is being claimed. However, there is a carve out for charities holding properties for qualifying charitable purposes, and in these circumstances no return is needed.

 

The Treasury acknowledge that the new measures will create an additional administrative burden, and the government has given a commitment to consult on the possible options to simplify the administration of ATED for property businesses eligible for the reliefs.

 

VAT

Registration and deregistration thresholds

With effect from 1 April 2015, the VAT registration and deregistration thresholds have increased as follows:

 

  • The taxable turnover threshold (which determines when a person must register for VAT) will be increased from £81,000 to £82,000; and
  • The deregistration threshold (which determines when a person may deregister for VAT) will be increased from £79,000 to £80,000.

 

Income and Employment Tax

Savings income

A new Personal Savings Allowance

The government will introduce an allowance from 6 April 2016 to remove tax on up to £1,000 of savings income for Basic Rate taxpayers and up to £500 for Higher Rate taxpayers. Additional Rate taxpayers will not receive an allowance. As part of these reforms HM Revenue and Customs (HMRC) will introduce automated coding out of savings income that remains taxable through the Pay As You Earn system from 2017 to 2018, with pilots starting in Autumn 2015.

Making Individual Savings Accounts (ISAs) more flexible

Individuals will be able to withdraw and replace money from their cash ISA in-year without it counting towards their annual ISA subscription limit, and the government will change the rules this autumn following technical consultation with ISA providers.

Tax rates and allowances

Income Tax Personal Allowance in 2016/17 and 2017/18

The personal allowance will be increased to £10,800 for 2016/17 and £11,000 in 2017/18. The Basic Rate limit will be increased to £31,900 for 2016/17 and £32,300 for 2017/18. As a result, the Higher Rate threshold will be £42,700 in 2016/17 and £43,300 in 2017/18.

 

From 2016/17, there will be one Income Tax personal allowance regardless of an individual’s date of birth.

 

The National Insurance Upper Earnings and Upper Profits Limits will increase to stay in line with the Higher Rate tax threshold.

Umbrella companies and employment intermediaries

The Autumn Statement 2014 announced that the government would review the growing use of overarching contracts of employment that allow some temporary workers and their employers to benefit from tax relief for home-to-work travel expenses, relief not generally available to other workers.

 

The government’s view is that the status quo is unfair, and as a result of the review, the rules will be changed to restrict travel and subsistence relief for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, and under the supervision, direction and control of the end-user. This will take effect from April 2016 following a consultation on the detail of the changes. The government’s intention is to level the playing field between employment businesses that seek to lower their costs by using these arrangements and those that do not, however the extent to which this measure will adversely affect those individuals who have been able to claim travel and subsistence relief in this manner up until now remains to be seen.

 

Stakeholders have also raised concerns that individuals do not understand how their take-home pay is affected by these arrangements. The government wants employment intermediaries to provide workers with greater transparency on how they are employed, and what they are being paid. The Department of Business Innovation and Skills will consult on these proposals on transparency later this year.

Employment intermediaries: penalties

As announced in the Autumn Statement 2014, the government will make a minor amendment to correct legislation underpinning the penalty regime for the late filing or non-submission of quarterly returns from employment intermediaries. This will take effect from 6 April 2015.

Cars, fuel and van benefits

Company car tax rates for 2019-20

The appropriate percentage of list price subject to tax will increase by 3% for cars emitting more than 75 grams of carbon dioxide per kilometer (gCO2/km), to a maximum of 37%, in 2019-20. There will be a 3% differential between the 0-50 and 51-75 gCO2/km bands and between the 51- 75 and 76-94 gCO2/km bands.

Company car tax rates for 2017-18 and 2018-19

As announced in the Budget 2014, the appropriate percentage of list price subject to tax will increase by 2% for cars emitting more than 75 gCO2/km, to a maximum of 37%, in both 2017-18 and 2018-19. In 2017-18 there will be a 4% differential between the 0-50 and 51-75 gCO2/km bands and between the 51-75 and 76-94 gCO2/km bands. In 2018-19 this differential will reduce to 3%.

Fuel benefit charge

From 6 April 2016 the Fuel Benefit Charge multiplier for both cars and vans will increase by RPI.

Van benefit charge

From 6 April 2016 the main Van Benefit Charge (VBC) will increase by RPI. As announced at Budget 2014, the government will extend VBC support for zero emission vans to 5 April 2020 on a tapered basis.

Employment status

Office of Tax Simplification (OTS) review of employment status.

The government has welcomed the publication of the OTS’s significant report on employment status and will respond to the recommendations made in the next Parliament.

Class 2 National Insurance contributions (NICs)

As part of the planned reforms to tax administration, the government will abolish Class 2 NICs in the next Parliament and will reform Class 4 to introduce a new contributory benefit test. The government will consult on the detail and timing of these reforms later in 2015.

Pensions

Annuities

The government will legislate from April 2016 to allow people who are already receiving income from an annuity to agree with their annuity provider to assign their annuity income to a third party in exchange for a lump sum or an alternative retirement product.

Lifetime allowance for pension contributions

The government will reduce the lifetime allowance for pension contributions from £1.25 million to £1 million from 6 April 2016. Transitional protection for pension rights already over £1 million will be introduced alongside this reduction to ensure the change is not retrospective. The lifetime allowance will be indexed annually in line with CPI from 6 April 2018.

Simplification

Making tax easier: the end of the tax return

The government will transform the tax system over the next Parliament by introducing digital tax accounts to remove the need for individuals and small businesses to complete annual tax returns. Further details on the policy and administrative changes needed to deliver this will be published later in 2015.

Making tax easier: new payments process

The government will consult over the summer on a new payment process to enable tax and National Insurance contributions (NICs) to be collected through digital accounts instead of self-assessment.

 

Duties

Alcohol duty rates

From 23 March 2015 the duty rates on general beer, sprits and lower strength cider were reduced by 2%. The duty rate on low strength beer was reduced by 6% and the total duty rate on high strength beer was reduced by 0.75%. The duty rate on high strength still cider was reduced by 1.3% and the duty rates on wine below 22% alcohol by volume and high strength sparkling cider were frozen.

Tobacco duty rates

As announced in the Budget 2014 duty rates on tobacco products increased by 2% above RPI. These changes came into effect from 6:00pm on 18 March 2015.

Fuel duty

The government will cancel the RPI inflation fuel duty increase of 0.54 pence per litre scheduled for 1 September 2015.

Corporation Tax

It is common for charities to own non-charitable subsidiary companies; the following announcements made in the Budget will be applicable to such companies and may therefore be of interest to charities.

Rate of corporation tax

The current main rate of corporation tax is 20% (as of 1 April 2015), bringing it in line with the small companies’ rate of corporation tax which remains at 20%.

Capital allowances

In the 2014 Budget there was an announcement that the Annual Investment Allowance limit would fall from £500,000 to £25,000 from 1 January 2016. The government has announced in the 2015 Budget their intention to review this but there is currently no indication of what the allowance may change to.

Anti-avoidance measures

A number of anti-avoidance provisions have been finalised and are now to be legislated for, such as diverted profits tax rules, country by country reporting under BEPS (Base Erosion Profit Shifting), and the prevention of contrived arrangements to refresh corporation tax losses.

We are very pleased to note that government have listened to representations made by KPMG, and others, and have excluded gift aid payments from the diverted
profits tax legislation.

Stamp Duty Land Tax (SDLT)

Treatment of shared ownership properties

As announced in the Autumn Statement 2014, it has been confirmed that the government will extend the SDLT multiple dwellings relief to include superior interests in residential property, such as shared ownership. This will apply where the transaction is part of a lease and leaseback arrangement, if acquired from a qualifying body such as a housing association.

The change took effect from the date on which the Finance Bill 2015 received Royal Assent (26 March 2015).

Extension of the Annual Tax on Enveloped Dwellings (ATED) to properties worth over £500,000
 
ATED was introduced from 1 April 2013 and currently applies to UK residential property valued at more than £2 million owned by companies, some partnerships, and other corporate vehicles. From 1 April 2015 a new band comes into effect for properties with a value over £1 million while the threshold will reduce to £500,000 with effect from 1 April 2016.
 
As announced in the Autumn Statement 2014, rates of ATED for properties valued at more than £2 million have been increased by 50% plus inflation.
 
An ATED return will need to be completed for each property over the threshold. HMRC do however permit one return per company where multiple properties are held and the same relief is being claimed. However, there is a carve out for charities holding properties for qualifying charitable purposes, and in these circumstances no return is needed.
 
The Treasury acknowledge that the new measures will create an additional administrative burden, and the government has given a commitment to consult on the possible options to simplify the administration of ATED for property businesses eligible for the reliefs.

VAT

Registration and deregistration thresholds

With effect from 1 April 2015, the VAT registration and deregistration thresholds have increased as follows:

  • The taxable turnover threshold (which determines when a person must register for VAT) will be increased from £81,000 to £82,000; and
  • The deregistration threshold (which determines when a person may deregister for VAT) will be increased from £79,000 to £80,000.

Income and Employment Tax

Savings income

A new Personal Savings Allowance

The government will introduce an allowance from 6 April 2016 to remove tax on up to £1,000 of savings income for Basic Rate taxpayers and up to £500 for Higher Rate taxpayers. Additional Rate taxpayers will not receive an allowance. As part of these reforms HM Revenue and Customs (HMRC) will introduce automated coding out of savings income that remains taxable through the Pay As You Earn system from 2017 to 2018, with pilots starting in Autumn 2015.

Making Individual Savings Accounts (ISAs) more flexible

Individuals will be able to withdraw and replace money from their cash ISA in-year without it counting towards their annual ISA subscription limit, and the government will change the rules this autumn following technical consultation with ISA providers.

Tax rates and allowances

Income Tax Personal Allowance in 2016/17 and 2017/18The personal allowance will be increased to £10,800 for 2016/17 and £11,000 in 2017/18. The Basic Rate limit will be increased to £31,900 for 2016/17 and £32,300 for 2017/18. As a result, the Higher Rate threshold will be £42,700 in 2016/17 and £43,300 in 2017/18.
 
From 2016/17, there will be one Income Tax personal allowance regardless of an individual’s date of birth.
 
The National Insurance Upper Earnings and Upper Profits Limits will increase to stay in line with the Higher Rate tax threshold.

Umbrella companies and employment intermediaries

The Autumn Statement 2014 announced that the government would review the growing use of overarching contracts of employment that allow some temporary workers and their employers to benefit from tax relief for home-to-work travel expenses, relief not generally available to other workers.
 
The government’s view is that the status quo is unfair, and as a result of the review, the rules will be changed to restrict travel and subsistence relief for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, and under the supervision, direction and control of the end-user. This will take effect from April 2016 following a consultation on the detail of the changes. The government’s intention is to level the playing field between employment businesses that seek to lower their costs by using these arrangements and those that do not, however the extent to which this measure will adversely affect those individuals who have been able to claim travel and subsistence relief in this manner up until now remains to be seen.
 
Stakeholders have also raised concerns that individuals do not understand how their take-home pay is affected by these arrangements. The government wants employment intermediaries to provide workers with greater transparency on how they are employed, and what they are being paid. The Department of Business Innovation and Skills will consult on these proposals on transparency later this year.

Employment intermediaries: penalties

As announced in the Autumn Statement 2014, the government will make a minor amendment to correct legislation underpinning the penalty regime for the late filing or non-submission of quarterly returns from employment intermediaries. This will take effect from 6 April 2015.

Cars, fuel and van benefits

Company car tax rates for 2019-20

The appropriate percentage of list price subject to tax will increase by 3% for cars emitting more than 75 grams of carbon dioxide per kilometer (gCO2/km), to a maximum of 37%, in 2019-20. There will be a 3% differential between the 0-50 and 51-75 gCO2/km bands and between the 51- 75 and 76-94 gCO2/km bands.

Company car tax rates for 2017-18 and 2018-19

As announced in the Budget 2014, the appropriate percentage of list price subject to tax will increase by 2% for cars emitting more than 75 gCO2/km, to a maximum of 37%, in both 2017-18 and 2018-19. In 2017-18 there will be a 4% differential between the 0-50 and 51-75 gCO2/km bands and between the 51-75 and 76-94 gCO2/km bands. In 2018-19 this differential will reduce to 3%.

Fuel benefit charge

From 6 April 2016 the Fuel Benefit Charge multiplier for both cars and vans will increase by RPI.

Van benefit charge

From 6 April 2016 the main Van Benefit Charge (VBC) will increase by RPI. As announced at Budget 2014, the government will extend VBC support for zero emission vans to 5 April 2020 on a tapered basis.

Employment status

Office of Tax Simplification (OTS) review of employment status

The government has welcomed the publication of the OTS’s significant report on employment status and will respond to the recommendations made in the next Parliament.

Class 2 National Insurance contributions (NICs)

As part of the planned reforms to tax administration, the government will abolish Class 2 NICs in the next Parliament and will reform Class 4 to introduce a new contributory benefit test. The government will consult on the detail and timing of these reforms later in 2015.

Pensions

Annuities

The government will legislate from April 2016 to allow people who are already receiving income from an annuity to agree with their annuity provider to assign their annuity income to a third party in exchange for a lump sum or an alternative retirement product.

Lifetime allowance for pension contributions

The government will reduce the lifetime allowance for pension contributions from £1.25 million to £1 million from 6 April 2016. Transitional protection for pension rights already over £1 million will be introduced alongside this reduction to ensure the change is not retrospective. The lifetime allowance will be indexed annually in line with CPI from 6 April 2018.

Simplification

Making tax easier: the end of the tax return

The government will transform the tax system over the next Parliament by introducing digital tax accounts to remove the need for individuals and small businesses to complete annual tax returns. Further details on the policy and administrative changes needed to deliver this will be published later in 2015.

Making tax easier: new payments process

The government will consult over the summer on a new payment process to enable tax and National Insurance contributions (NICs) to be collected through digital accounts instead of self-assessment.

Duties

Alcohol duty rates

From 23 March 2015 the duty rates on general beer, sprits and lower strength cider were reduced by 2%. The duty rate on low strength beer was reduced by 6% and the total duty rate on high strength beer was reduced by 0.75%. The duty rate on high strength still cider was reduced by 1.3% and the duty rates on wine below 22% alcohol by volume and high strength sparkling cider were frozen.

Tobacco duty rates

As announced in the Budget 2014 duty rates on tobacco products increased by 2% above RPI. These changes came into effect from 6:00pm on 18 March 2015.

Fuel duty

The government will cancel the RPI inflation fuel duty increase of 0.54 pence per litre scheduled for 1 September 2015.

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