In a surprise move the Chancellor of the Exchequer, Philip Hammond, announced today that the Autumn Statement would be abolished, and we would instead be switching to an ‘Autumn Budget’ to announce tax changes well in advance of the start of the tax year and a ‘Spring Statement’ which will no longer be a major fiscal event. “I will not make significant changes twice a year just for the sake of it” said the Chancellor.
This should provide clients with more certainty and will allow for greater scrutiny of the Budget ahead of the tax year, which begins on 6th April.
As previously announced the rate of corporation tax will fall to 17% (as planned) by 2020. Some commentators had interpreted the Prime Minister’s comments on wishing for the UK to have the lowest corporation tax rate in the G20 as an indication that the rate would be reduced to 15%, i.e. to the rate proposed by the US president-elect, Donald Trump. For now at least, Hammond has not reduced the rate further.
Crackdown on Tax Avoidance and Evasion
It was also announced that there would be a crackdown on tax avoidance particularly in the areas of ‘disguised remuneration’, ‘employee shareholder status’ and ‘VAT flat-rate’ schemes.
The penalties and sanctions relating to those deemed to be ‘enablers’ of tax avoidance schemes were reiterated again today. It was announced in the supporting documentation that draft legislation will be issued shortly. Please see our commentary on the proposed enablers legislation here.
In addition a new ‘requirement to register offshore structures’ will be consulted upon. This may require intermediaries who are “arranging complex structures for clients holding money offshore to notify HMRC of the structures and the related client lists”. We await further detail on this proposal.
Deemed-Domicile and Offshore Structures Holding UK Residential Property – April 2017 Rule Changes
It was confirmed that the upcoming changes to the taxation of non-domiciled individuals (non-doms) and offshore structures which hold UK residential property would proceed as planned and will be effective from 6th April 2017, although no further detail was released today. Please see here for an overview of the new rules.
As a result, we anticipate significant enquiries from clients wishing to restructure their existing offshore assets ahead of April. We are expecting draft legislation to be released in early December and we will continue to monitor the position.
Other Tax Announcements
- Employer and employee National Insurance thresholds would be aligned.
- Many ‘salary sacrifice’ tax reliefs would be removed, though tax relief relating to pension contributions and childcare would remain.
- As previously announced, the income tax personal allowance threshold will be raised to £11,500 in April 2017 and the higher rate income tax threshold will rise to £50,000 by 2020.