Further announcements in the Autumn Budget that affect individuals.
With immediate effect, various perceived anomalies in the stamp duty land tax (SDLT) surcharge on second homes have been corrected:
A disposal of a main residence to a co-habiting spouse no longer counts for the purposes of ‘replacement of main residence relief’ from the surcharge. This is an anti-avoidance provision;
A purchase of a further interest in the purchaser’s main residence of three years or more is generally no longer subject to the surcharge. For example, a long lease renewal should benefit from the relief as long as the existing lease has at least 21 years left to run;
Purchases of residential property from spouses are no longer subject to the surcharge;
In divorce proceedings, property owned by a person pending implementation of a property adjustment order in favour of that person’s spouse, will not count as owned by that person for the purposes of establishing whether that person’s next purchase of a dwelling is a ‘second home’. This potentially relieves the next purchase from the surcharge; and
Residential property owned by minors (i.e. overseas property or through trusts) is no longer treated as owned by their parents in certain Court of Protection circumstances.
Under the Marriage Allowance (introduced in 2015), individuals can transfer 10% of their personal allowance to their spouse or civil partner, where the recipient is not a higher rate or additional rate tax payer.
Whilst claims can be backdated for up to 4 years, the current legislation states that the marriage or civil partnership needs to have existed (i) for the whole or part of the tax year concerned and (ii) when the election is made.
From 29 November 2017, the Marriage Allowance will be amended to allow individuals whose spouse or civil partner is deceased to apply for Marriage Allowance, with the same 4 year backdating permitted.
This measure is to be welcomed, as it could reduce the applicant’s tax by up to £230 per year and those whose spouses or civil partners have died are no longer prevented from claiming the allowance post death.
Changes introduced in July 2015 concerning the taxation of carried interest received in respect of Private Equity investments, were at the time, accompanied with a number of transitional provisions. The objective of these transitional provisions were to create a ‘fair’ transition for taxpayers impacted by the new rules. They did this by seeking to ensure that transactions that had taken place prior to the implementation of the new rules, were not unfairly caught where amounts were later distributed to the taxpayer.
Now that the rules have been in force for some time it is considered that the transitional rules will have limited application. As a result, the transitional provisions have been removed from UK tax law. The Government’s objective is to ensure that the transitional provisions are not manipulated to unfairly reduce tax otherwise now due.