The Chancellor of the Exchequer gave his Autumn Statement to Parliament on 23rd November 2016. There are no new major tax changes and so it is business as usual.
Corporation tax rate – The main rate of corporation tax will be cut to 17% by 2020
Interest deductibility – New rules will be introduced from April 2017 to limit the tax deductions that groups can claim for UK interest expenses
Loss relief – Legislation will be introduced to restrict the use of carried-forward losses to 50% of profits in excess of £5m. The new rules apply from 1 April 2017. Special rules continue to apply for banks
Bringing non-resident companies’ UK income into the corporation tax regime – The government is considering bringing all non-resident companies receiving taxable income from the UK into the corporation tax regime. A consultation will be published on the case and options for implementing this change
Substantial shareholder exemption (SSE) – From April 2017, changes will be made to simplify the rules, remove the requirement for the investing company to be a trading company or a member of a trading group, and provide a more comprehensive exemption for companies owned by qualifying institutional investors
Research & Development (R&D) – The government will review the tax environment for R&D to look at ways to build on the introduction of the ‘above the line’ R&D tax credit to make the UK an even more competitive place to do R&D.
Employee Shareholder Status (ESS) – The income tax and CGT reliefs on shares issued to an employee under an ESS agreement made on or after 1 December 2016 will be withdrawn. Tax relief in respect of shares issued under ESS agreements made before that date is not affected
Taxation of different form of remuneration:
Salary sacrifice – From April 2017 the tax and employer National Insurance advantages of salary sacrifice schemes will be removed so that the salary sacrificed is subject to the same tax as cash income. There are exemptions including arrangements relating to pensions, childcare, Cycle to Work and ultra-low emission cars. Arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021
Valuation of benefits in kind – The government will consider how benefits in kind are valued for tax purposes, publishing a consultation on employer-provided living accommodation and a call for evidence on the valuation of all other benefits in kind at Budget 2017
Employee business expenses – The government will publish a call for evidence at Budget 2017 on the use of the income tax relief for employees’ business expenses, including those that are not reimbursed by their employer
NIC – A marginal increase in employer’s NIC was announced.
VAT – A new 16.5% rate will apply form 1 April 2017 for businesses with limited cost e.g labour only businesses.
Business tax road map – The government recommitted to the business road map as published at Budget 2016
VCT, EIS, SEIS – New flexibility for VCT investments and clarification regarding rules applying to EIS and SEIS are to be introduced
Partnerships – Consultation announced into the tax treatment of partnership ensuring that profits are allocated fairly between partners
Electric Car Charge point – 100% First Year will be available for installations
Business Investment Relief – Simplification will be introduced from April 2017
Personal allowance and higher rate threshold – The income tax personal allowance (PA) will rise to £12,500 and the higher rate threshold to £50,000 by the end of this Parliament. In April 2017, the personal allowance will rise to £11,500 and the higher rate threshold to £45,000. Once the PA reaches £12,500 it will increase in line with inflation
National Insurance thresholds –The employer (secondary) NI threshold and the employee (primary) NI threshold will be aligned from April 2017. Both employees and employers will start paying NI on weekly earnings above £157. Class 2 NICs will be abolished from April 2018
IHT – Inheritance Tax Relief will be available for donations to political parties
Non-domiciled individuals – There are no new announcements on non-doms. The changes proposed initially in the 2015 Summer Budget and in further consultations will be introduced from 5 April 2017. Further detail is likely to be included in the draft Finance Bill, expected to be published on 5 December 2016
Off-payroll working rules – Following consultation, the government will reform the off-payroll working rules in the public sector from April 2017 by moving responsibility for operating them, and paying the correct tax, to the body paying the worker’s company
ISA limit – This will increase from £15,240 to £20,000 from April 2017
Pensions money purchase annual allowance – This will be reduced to £4,000 from April 2017
Pensions anti-avoidance provisions – Rules to be introduced to extend UK taxing rights form 5 to 10 years for emigrating individuals drawing down from a UK pension.
Foreign pensions – The tax treatment of foreign pensions will be changed, bringing foreign pensions and lump sums fully into tax for UK residents, in the same way UK pension’s are taxed. A number of other changes to specialist foreign pensions and situations were also announced.
Avoidance and evasion provisions:
Disguised remuneration – The Budget 2016 amendments will be extended to tackle the use of disguised remuneration schemes by the self-employed. Also new rules will apply to deny tax relief for employer’s contributions to such schemes unless tax and National Insurance are paid within a specific time period
Strengthening sanction for enablers – Following a recent consultation, the government will introduce sanctions for those who design, market or facilitate the use of tax avoidance arrangements which are later defeated by HMRC
VAT flat rate scheme – A new 16.5% rate will apply from 1 April 2016 for businesses with limited costs eg labour-only businesses
Offshore tax evasion – A new legal requirement to correct a past failure to pay UK tax on offshore interests will be introduced. Also, a consultation will be published on introducing a new legal requirement for intermediaries arranging complex structures for client holding money offshore to notify HMRC
Tax simplification – The Office of Tax Simplification is to review aspects of the VAT system and Stamp Duty on share transactions.
Business rates – Both rural rate relief and small business rate relief will be increased to 100% from April 2017
Insurance premium tax – The rate will increase to 12% from 1 June 2017
Soft Drinks – Soft drinks industry levy draft legislation will be published on 5 December 2016