There were few new tax announcements affecting individuals, but confirmation of pre-announced plans and measures protecting the tax base.
With the Chancellor focussing on meeting the UK’s productivity challenge, the Autumn Statement brought a welcome degree of stability for the taxation of individuals with few new measures announced that will have wide or significant impacts.
Confirmation of planned measures
Rather than introducing new wide-ranging reforms, the Chancellor instead confirmed the Government’s commitment to key prior announcements. These include increasing the income tax personal allowance to £12,500 and the higher rate income tax band to £50,000 by the end of the current Parliament.
In addition, plans to introduce a new £1,000 tax-free allowance were confirmed for those with low levels of trading or property income.
The Government will also proceed with its plans to amend the taxation of gains from life assurance bonds and to clarify the taxation of partnership profit shares, with legislation in Finance Act 2017. The Government also remains committed to the introduction of Making Tax Digital.
Ongoing reforms for non-domiciles and international investors
The announcements confirm the Chancellor’s intention to proceed with the reform of the taxation of non-UK domiciled individuals, which have been the subject of consultation over recent months. For futher information, please click here
They also reiterate the planned changes to the inheritance tax treatment of UK residential property held via non-UK structures. For futher information, please click here
Both these reforms will apply from 6 April 2017, with further legislation expected on 5th December 2016, presenting a limited amount of time for taxpayers to review their affairs and take any appropriate action.
The Chancellor also confirmed plans to improve the Business Investment Relief regime from 6 April 2017. This is a welcome change which should make it more attractive and less restrictive for non-UK domiciled individuals to invest their offshore funds in UK businesses.
The Government will consult on bringing all non-resident companies receiving taxable income from the UK into the corporation tax regime in order to ensure equal treatment. This would, for example, be relevant to non-UK resident landlords owning UK real estate. How wide-reaching the impact of such a change will be remains to be seen.
Protecting the tax base
In common with Budget and Autumn Statements over the past few years measures have been included to tackle tax avoidance and tax evasion. Measures requiring taxpayers to correct historic errors or omissions in their tax returns will proceed, as will new sanctions against those who promote or enable tax avoidance.
A new requirement was announced that will require registration by intermediaries “arranging complex structures for clients holding money offshore to notify HMRC of the structures and the related client lists”.
The tax advantages provided by shares awarded under Employee Shareholder Status (ESS), will be abolished for arrangements entered into on or after 1 December 2016. Any shares issued before that date will continue to benefit from the tax relief. The relief initially provided an uncapped tax exemption from capital gains tax for shares issued under ESS. However this was capped to £100,000 of gains for shares issued after April 2016.
The annual allowance for pensions savings for those with pensions already in drawdown will be reduced from £10,000 to £4,000 from April 2017. This reduced annual allowance is designed to prevent pension savers from re-cycling funds that they have already drawn from their pensions.
Following consultation, the tax and NIC advantages of salary sacrifice schemes will be removed from April 2017, with limited exceptions.
The Chancellor announced that the Spring 2017 Budget will be followed by
an Autumn Budget, marking a switch to a new annual Budget timetable.