UK Budget March 2016: Analysis

Today HMRC released updated Guidance Notes on implementing FATCA in the UK.

The Chancellor's 2024 Budget introduced moderate changes to Capital Gains Tax (CGT). Rates for basic and higher rate taxpayers increased to 18% and 24%, respectively. Business Asset Disposal Relief and Investors' Relief rates will rise from 10% to 18% by 2026, with anti-forestalling provisions. Rates for residential property disposals remain unchanged.

UK executors administering estates with US shares are facing unprecedented delays of two to three years when seeking IRS estate tax clearance through Form 706-NA applications. These processing bottlenecks, stemming from pandemic-related backlogs and ongoing IRS staffing pressures, are preventing executors from completing estate administration and leaving beneficiaries waiting years to receive their inheritance from US investments.

From April 2027, HMRC will begin mandatory payrolling of benefits in kind, moving away from the current system of year-end reporting towards real-time deductions through payroll. HMRC has confirmed a two-phased approach: only selected benefits will be subject to mandatory payrolling from April 2027, with full payrolling expected from April 2028 (subject to certain exclusions discussed below).

HMRC has proposed new legislation requiring taxpayers to correct known inaccuracies in tax returns, with failures to act being treated as deliberate behaviour attracting higher penalties and extended assessment periods. The draft legislation introduces a statutory duty to correct errors once identified and grants HMRC power to issue Customer Correction Notices, fundamentally shifting tax compliance from a technical exercise to a governance obligation that boards must actively oversee.

The UK Government has launched a consultation proposing significant changes to the withholding tax regime on interest payments to overseas lenders. The proposed reforms would shift from HMRC's current gatekeeping role to a self-assessment system where UK borrowers independently determine treaty relief eligibility, fundamentally altering compliance responsibilities and risk allocation in cross-border lending arrangements.

HMRC is increasing scrutiny of earn-out arrangements, particularly where founders remain involved in the business after completion and deferred consideration depends on future performance of the target company.

Wealthy clients with complex family structures often seek ways to reduce inheritance tax liabilities to maximize what their beneficiaries receive. From spousal exemptions and charitable giving to strategic lifetime gifts and the seven-year rule, various planning opportunities exist to minimize the 40% tax rate on estates exceeding £325,000. Understanding these exemptions and reliefs, combined with carefully drafted professional Wills, can significantly impact how much of your estate passes to your chos

The Chancellor, George Osborne, delivered his Autumn Statement and Spending Review to the House of Commons on Wednesday 25 November.

The Chancellor has today presented his Budget. Some of his announcements and proposals were in line with expectation; others caused more of a stir.