Spending Review & Autumn Statement 2015

George Osborne delivered his Autumn Statement on 25 November which was mainly publicised as a ‘Spending Review’ and indeed it did prove to be dominated by announcements on the level of spending and progress being made to turn the budget deficit into a surplus, with the Chancellor suggesting that the Government’s spending plans are on target to deliver a surplus of over £10bn by 2019/20.

There were relatively few announcements concerning tax measures but the much publicised cuts to tax credits were unexpectedly scrapped, with the Chancellor announcing that, amongst other things, higher than expected tax receipts had meant he was able to make that decision.

Although there were not many other changes to tax measures announced that made the headlines there are some interesting points in the Autumn Statement which will be relevant to many and I have highlighted a few of these below.

  • From 1 April 2016 it is planned that higher rates of Stamp Duty Land Tax (SDLT) will apply to purchases of ‘additional’ residential properties costing more than £40,000.

The Government will be launching a consultation on these plans so the detail has yet to be confirmed but the plan is that the rates of SDLT will be 3% higher than the existing rates and will apply to purchases of any additional residential properties i.e. whether they are second homes or buy-to-let properties for example;

  • The Government will also be consulting on plans to introduce a requirement to make a payment on account of any Capital Gains Tax (CGT) that is due on the disposal of residential property within 30 days of completion of the disposal.  This is not due to come in to force until April 2019 but it is potentially a major change in the timing of the payment of CGT in such circumstances.  Under current rules, the payment of CGT is not usually due until the 31st of January following the end of the tax year in which the disposal occurs, so the CGT can be due at any point between 10 and 22 months after the disposal;
  • The Chancellor had announced in the Spring Budget that there were plans to review the use of Deeds of Variation for tax purposes (as they can be used to effectively amend an individual’s Will and potentially help to reduce Inheritance Tax liabilities).  In the Autumn

Statement it was announced that the Government will not introduce any new restrictions on the use of Deeds of Variation but will continue to monitor their use;

  • The Government had previously announced its plans to radically change the way in which some taxpayers within self-assessment manage their tax affairs and report details of their income to HM Revenue and Customs (HMRC).  These changes had previously caught the headlines as being the ‘end of the Tax Return’ and time will tell exactly how the new ‘Digital Tax Accounts’ will work in practice.  Further details are due to be published by the Government shortly and a consultation will be launched next year.

The Chancellor did announce that most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account.  These measures will not generally apply to pensioners or individuals in employment unless they have ‘secondary incomes’ of more than £10,000 per year.

Amongst the other changes announced were some concerning the level of the State Pension, including an increase in the starting rate for a full new State Pension to £155.65 per week with effect from April 2016.  Various other increases to the level of Pension Credit were also included in the Statement and further details of these, along with more information on all of the key points announced in the Autumn Statement are included in our Autumn

Statement 2015 summary which you can download from our website (www.pearsonmay.co.uk).  Alternatively, pleasesend an email to mail@pearsonmay.co.uk and we would be happy to send you a copy.

The above is for general guidance only and no action should be taken without obtaining specific advice