Autumn Statement 2015: What to expect on tax. | KPMG | UK

Autumn Statement 2015: What to expect on tax, according to KPMG in the UK

Autumn Statement 2015: What to expect on tax.

Looking ahead to the Autumn Statement which the Chancellor is due to present on 25 November, Chris Morgan, Tax Partner at KPMG in the UK said:The Autumn Statement is always a big event and this year is unlikely to be any exception – especially as it is being combined with a spending review.


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Looking ahead to the Autumn Statement which the Chancellor is due to present on 25 November, Chris Morgan, Tax Partner at KPMG in the UK, said:  

“The Autumn Statement is always a big event and this year is unlikely to be any exception – especially as it is being combined with a spending review.

“In what is his third major set-piece economic event of the year, the Chancellor has a huge amount to cover in his speech.  Much attention is focussed on where he will seek to make savings in his spending review, details of his plans for changes to tax credits and perhaps a hint at the direction of travel on potentially major changes to pensions. 

“Setting out his priorities for the Autumn Statement earlier this month, George Osborne said he planned to ‘seek further savings from avoidance, evasion and imbalances in our tax system’.  So we can expect measures to strengthen HMRC in their fight against criminal activity, changes to legislation where government perceives that existing rules may have been abused and attempts to address any areas where government believes the playing field may need levelling.

“But what can we expect on some specific areas of tax?


“It is very likely, in the wake of the OECD’s BEPS deliverables published in October, that we will receive more detail on how the UK plans to implement the OECD’s proposals. Some consultations have already been opened including proposals on how the UK’s Patent Box should be modified to comply with BEPS Action 5 and a consultation on the UK’s rules on the deductibility of corporate interest expense and how this is impacted by BEPS Action 4. A comprehensive plan is unlikely at this stage, however, as the Government has said it will be considering the recommendations set out in the BEPS reports as part of the development of a new business tax roadmap which is expected to be published in spring 2016.

“Another key area where we may see an update at the Autumn Statement is the large business compliance consultation that ran from July to October this year. The consultation featured proposals for large companies to be required to publish their tax strategies, to allow greater scrutiny of their tax affairs. Also proposed were a voluntary code of practice on taxation for large businesses, which would set out what HMRC expects from large taxpayers, along with giving HMRC new powers to tackle a small number of companies that persistently engage in ‘aggressive tax planning’ or refuse to engage with HMRC. These measures have provoked lively debate, and it remains to be seen how the Government will respond.

“There are a number of other areas where we may see developments including a consultation on company distributions that was promised for the autumn.

“As mentioned above, we’re expecting a business tax roadmap next year which is likely to have details of plans for corporate tax and other taxes affecting business, but any hints as to what that might contain (in addition to BEPS implementation measures) would be very helpful.”


“For employers, the Autumn Statement is another piece in an ongoing jigsaw of consultation and change that looks set to continue for a while yet.  We should hear more about the next steps in some of the consultations that have been going on over the past few months, most notably into changes to the treatment of termination payments and IR35 (the tax and National Insurance contributions legislation that may apply when people work for a client through an intermediary and for freelance workers).  

“There could also be news about pensions which will be of great interest to employers as pension contributions can form a key part of remuneration strategies.  Notwithstanding recent news stories regarding the deferral of any decision until 2016, employers are also likely to look with interest for any indication of how the Government intends to take forward the proposals in the Pensions Green Paper.  

“There are a number of changes we already know are coming with effect from 6 April 2016 so employers should already be preparing for them:

  • The introduction of voluntary payrolling and a business expenses exemption;
  • The abolition of the £8,500 threshold for benefits in kind;
  • The Scottish Rate of Income Tax;Increased National Insurance Contributions Employment Allowance (from £2,000 to £3,000 a year);
  • Exemption from employers’ NIC for apprentices aged under 25, which means that no employers’ NIC will be due on amounts up to the Upper Earnings Limit (currently £815 per week) and
  • The introduction of restrictions on travel and subsistence relief for those engaged through intermediaries.
“Beyond what we know is coming, there are some things we’d like to see included in the Autumn Statement for employers.  For example, at last year’s Autumn Statement, the Government confirmed that there would be a post-implementation review of Real Time Information, under which employers report PAYE data in real time. An active commitment to take this review forward, and to address the problems that remain with RTI, would be welcome.
“It would also be good to see a review and simplification of the extremely complicated rules around how internationally mobile workers are taxed with the overall aim of ensuring that the UK remains an attractive destination for expatriate employees, and that those employees are encouraged to use their money in the UK for the benefit of the UK economy.”
“Additionally, we hope to see a softening of HMRC’s position with regard to the items which may be included on an employer’s PAYE Settlement Agreement (PSA).  The Office of Tax Simplification has continued to lobby HMRC for greater flexibility in this area, to accommodate the wide array of miscellaneous benefits on which an employer may wish to settle the tax and NIC on behalf of employees, and we would welcome the announcement of any administrative simplifications to the current process.

Personal tax

“Following on from the two 2015 Budgets it remains to be seen if the Chancellor will see the Autumn Statement as the right time to announce further changes for individual taxpayers. 

“Which of his announcements taxpayers may be interested in will depend on their individual circumstances – some will be interested in the high profile issue of tax credits, whereas others will be concerned with the changes to dividends, residential property and the taxation of non UK domiciled individuals.

“Again, there are a number of changes we already know are on the way: with the tax lock already in place, providing that the basic higher and additional rates of income tax will not increase above 20 percent, 40 percent and 45 percent for the duration of the current Parliament and the prospect of the current 20 percent corporation tax rate falling to 18 percent by 2020, it is shareholders who are set for increased tax rates. The Government has already announced that in combination with the abolition of the dividend tax credit, dividend income above the new Dividend Allowance of £5,000 will be taxed at increased rates. 

“Other changes already announced that are due to take effect from April 2016 include:

  • Personal allowance increase (from £10,600 to £11,000);
  • Income tax higher rate threshold increase (from £42,385 to £43,000);
  • Taxation of lump sum death benefits from pensions (lump sums paid on death of someone over 75 will be taxed at the recipient’s marginal rate rather than the previous rate of 45%);
  • Reduced pensions annual allowance for higher earners (the £40,000 annual allowance is tapered down for those with income over £150,000, reducing to a minimum of £10,000 for those with income over £210,000); and
  • Introduction of the Scottish Rate of Income Tax.
“Individuals, including those with inadvertent non-compliance in relation to offshore assets (often assets held in complex structures) need to be aware of the closure of Liechtenstein Disclosure Facility from 31 Dec 2015. Whilst we are expecting further information about the ‘last chance’ disclosure facility in the Autumn Statement, it is anticipated that this will not provide the same terms as the Liechtenstein Disclosure Facility. Following consultation, we are also expecting further information about the proposed criminal liability charge for failure to disclose overseas assets, regardless of proof of intention.
“And what would we like to see?  The Government has consulted on proposals to abolish permanent non-dom status.  We may get an update on the Government’s plans in the Autumn Statement although it is hoped, that in order to allow sufficient time for working up proposals on the complex area of offshore trusts, progress in this area will be delayed until 2016.
“The Government continues to see UK residential property as an area from which to raise tax revenues with numerous changes over the last few years including the introduction of the Annual Tax on Enveloped Dwellings, significant increases to Stamp Duty Land Tax, Capital Gains Tax for non-residents from April 2015 and now restrictions on finance costs such as interest for non-corporate landlords coming into effect from April 2017. In addition a consultation is expected in the New Year on the July 2015 proposals to bring all UK property held through offshore structures by non-domiciles into the scope of UK inheritance tax. With so many changes to the rules around residential property, that impact funding structures and ownership for both existing and new owners we encourage the Government to give due and proper consultation to any proposed changes to ensure their implementation is practically and commercially viable. 
“In addition, the Pensions Green Paper issued at the Summer Budget asked the question whether the current tax regime for pensions was adequately encouraging individuals to save for their retirement. Whilst there were no proposals, the one example provided was to change the current ‘Exempt, Exempt, Taxed’ system – where contributions into a pension and growth in the pension fund are tax free, and the pension is taxed when taken – to a ‘Taxed, Exempt, Exempt’ system where tax is paid on contributions but growth in the pension fund, along with the pension when taken, is exempt. The Chancellor has already indicated full details of any Government reform will be deferred to next spring but we may see a direction of travel in the Autumn Statement. 
“In summary: the Chancellor seems to always manage to pull a few rabbits out of his hat on these occasions and even though he’s already had two Budgets this year we are expecting a few surprises.”
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel:  0207 694 4246 Mobile: 07920 274856:
Jess Liebmann, KPMG Corporate Communications
Tel: 0207 311 3245 Mobile: 07551135778:
KPMG Press Office: 0207 694 8773
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