Backing aspiration was again the key theme for today's Autumn Statement as Chancellor George Osborne announced a number of populist 'giveaways' designed to get the Government's political bandwagon rolling ahead of next year's General Election.
Rewarding savers, workers and homeowners
Supporting savers, workers and those aspiring to own their homes through, for example, changes to Stamp Duty Land Tax, an increase in the personal tax allowance and the inheritance of Individual Savings Accounts and pensions, were just a few of the measures announced, along with a long-awaited rise in the income tax threshold for those in the 40% tax band.
Long-term future not so bright for 'non-doms'
Proposals to increase the charge on non-doms who elect to pay tax on a remittance basis sensibly does not affect people coming to the UK in their first few years, although a higher charge will kick in for those who have been resident for longer. The measure likely to have the greatest impact, however, is the Government's plans to consult on making the election to pay the remittance basis charge apply for a minimum of three years. This makes it more difficult for non-doms to arrange their tax affairs so that they only pay the charge in occasional years, such as those when significant income and gains are brought into the UK.
Boost for small businesses
Small businesses received a welcome boost, with an extension of the doubling of the small business rate relief to 1 April 2016 and an increase in research and development tax credits, among other measures. The Government has, however, introduced rules preventing individuals or members of partnerships claiming Entrepreneurs' Relief on disposals of business goodwill when a business is transferred to a related close company. Gains on other assets will not be affected.
Clampdown on multinationals and banks
Multinationals and banks remain on the 'naughty step', as the Chancellor announced an ever-sharper focus on eliminating perceived tax avoidance and non-compliance.
A new 'diverted profits' tax will apply to multinational companies using artificial arrangements to divert profits overseas in order to avoid UK tax. At 25% the tax rate will be 5% higher than the UK corporation tax rate of 20%, encouraging companies to keep profits onshore rather than diverting them to lower tax jurisdictions.
Meanwhile the use of losses by banking companies will be restricted to 50% of their annual taxable profits arising after 1 April 2015. The unused losses can be carried forward, but this will result in a significant decrease in the rate at which corporation tax relief will be available to them.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
