With two Budget’s already this year the Chancellor clearly felt he had said enough about tax changes and in the Autumn Statement stuck mainly to statistics on the improving economy quoting many positive percentages from the Office for Budgetary Responsibility (OBR). The consensus was that the economy is performing well and that has allowed a number of concessions to be made. After a number of Budgets reporting of poorer than expected tax receipts the pendulum has finally swung the other way as profitability and incomes increase. Tax receipts along with reduced costs of financing the debt mean there is a £27bn windfall to play with. At HMRC it is all change with “paper pushing” offices being closed (such as the local Gravesend office) and the savings being used to target tax evasion and avoidance, and put in place digital tax accounts for all businesses and individuals by the end of the decade. Professionals in the sector are dubious about whether this will actually work as HMRC is already struggling to cope with less than 50% of calls being answered.
The main headline grabber was the reversal of the cuts to tax credits which was to take effect from April, after rejection of the move in by the House of Lords. While this means in the short term that the reduction in the Welfare budget will not be met, in the long term these will be introduced anyway on transfer to the Universal Credits from 2018.
Some small points of interest to small employers, Kentish folk, sport supporters and parents were:
- Increases in the rates of contribution to autoenrolment pensions will be timed to change with the tax year to ease administration
- £1/4bn is being made available to Kent to help with the problem of Operation stack where lorries are parked on a closed section of the M20 motorway when there are problems with tunnel or ferry connections to the continent
- A 29% increase in funding for UK Sport ahead of the Rio Olympics, looking to continue the feel-good factor generated by the London Games
- 30 hours free childcare will now be restricted to parents working over 16 hours and earning less than £100k
The biggest changes were for landlords and owners of second homes:
- From 2019 capital gains tax on sale of residential property will be payable within 30 days, a challenging administrative exercise unless you have all the details ready in advance
- From April there will be a 3% supplementary stamp duty on purchase of buy to let or second homes. The Chancellor acknowledged that the restriction of mortgage interest relief for higher rate taxpayers would not affect cash buyers looking to invest in property, so introduced this measure as a further disincentive.
Whether the changes to landlord taxes will make a difference remains to be seen, and no doubt there will be further details released in the next few days. This is a brief summary of the announcements of most interest to clients and you should seek professional advice before taking any steps based on the contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”