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.
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:
“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: