This page remains here for historic research interest on the Finance Act 2015
NOTE >> ALL LATER BUDGET AND FINANCE ACT SUMMARIES ARE AVAILABLE ON OUR BLOG
The Budget speech was on 18th March 2015 with the resulting 2015 Finance Act legislation following on 26th March - only 8 DAYS later. A record for the fastest passing of a Finance Act.
Many proposals were announced before the Budget speech (personal allowances, corporation tax rates, VAT rates etc.) and are incorporated in the other corresponding pages of this site.
10 out of 26 compliance measures in this Act are anti-avoidance and anti-abuse measures. Typically this would be to help HMRC conteract what it calls "aggresive" tax avoidance.
The main chages of the Act are included elsewhere in this site. Below are other changes enacted in the Finance Act 2015 but which are mainly effective AFTER the tax year 2015/16.
Scroll down for information on:
- Abolition of the "annual" Tax Return and replacement with the "onine digital account"
- Income Tax
- National Insurance contributions
- Taxation of savings interest
- P11D "benefits" and reimbursed expenses
- Capital Gains tax
- Corporation tax
- Diverted Profits
- Direct recovery of unpaid tax debts from bank accounts
- Extension of non-dom "remittance basis" charge
- Reform of business rates
- Inheritance tax
- Peer To Peer lending
- Automatic exchange of information
- IR35 and "umbrella" companies
Abolition of the "annual" Tax Return and replacement with the "online digital account"HMRC plan to abolish the requrement for taxpayers to file one Tax Return each year. Clearly they still need top gather the financial information from somewhere so they propose creating a new online account where taxpayers, employers, pension companies, banks, building socities and other organisations will be able to input figures. The question is - WHAT will all this mean?
HMRC have not yet given details of their plan to impliment this but they have announced that they will publish a "roadmap" "later this year" to show how they intend to do it.
Instead of ONE filing deadline for the annual Tax Return - 31st Janaury - people may be required to file their financial information to their online account EVERY MONTH much as employers are requried to do now under "Real Time Information".
Our fear is that it will only work for people with the most straightforward of tax affairs. Others - such as the self employed, landlords, people who receive Trust income, those with Captal Gains and others with more complex tax affairs - will not be able to use this new system.
At some time "during the next parliament" the weekly self employed NI contribution - known as Class 2 - will be abolished and the Class 4 NI, also paid by the self employed with earnings above the starting point, will be "reformed". The word "reformed" probably means "increased".
Taxation of savings interest
Interest paid by banks and some other institutions is subject to tax deductions at source before it is padi to the investor. From April 2016 it is proposed that such interest will be paid GROSS without any tax deducted as it used to be in past times.
This could mean that more people may need to file Tax Returns or online digital accounts but many may not even realise they are obliged to do so.
P11D "benefits" and reimbursed expenses
From April 2016 changes are being enacted to ease the reporting requirements for employers as concerns "Benefits In Kind" and reimbursed expenses.
New rates of charge for car beneifts have been announced for 2017/18 and 2018/19
Benefits will increase by 2% in both years to a maximum of 37% applied to the list price of the car for both years.
Cars with emissions between 0-50 b/km and 51-75 b/km will increase by 4% and 3% respectively in 2018/19 compared to 2017/18. The Fuel Benefit Charge rate will increase by RPI from April 15.
Capital Gains tax
Changes are to be implimented to the rules on Entrepreneur's Relief related to associated disposals, joint ventures, partnerships and incorporation. Contact us for full details if you are planning on taking advantage of this relief.
Following HMRC's loss of the Henderskelfe / Castle Howard case new legislation is being
introduced to restrict tax relief for wasting assets used in businesses and leased.
"Contrived loss" arrangements - Companies are prevented from converting old losses brought forward into new reliefs that couold be used more flexibly. Where the rule applies, companies will be prevented from using the carried-forward reliefs to reduce taxable profits that arise from the arrangements.
Creative industries - film companies, orchestras and TV companies are allowed to benefit
from tax a range of new tax incentives.
Diverted Profits Tax
Otherwise commonly known as the "Google tax" this seeks to tax international businesses which trade in the UK but pay little or no tax on their profits here.
Direct recovery of unpaid tax debts from bank accounts
HMRC will use this power to collect debts from taxpayers who do not pay their tax
liabilites. The legislation contains many safeguards but care will need to be taken
here. The motto is to make sure all tax bills are paid fully and on time.
"Remittance basis" chargeUnder current regulations a non domiciled taxpayer can elect to opt in or out of the remittance basis each year. This can be useful for tax planning. A change is implimented that an election to pay the remittance basis charge must apply for a minimum of 3 years before it can be changed.
Reform of business rates
The government has announced a "major review" to examine the structure of the current rating system. The review will examine businesses use property, what the UK can learn from other countries about local business taxes, and how the system can be modernised. The review is planned to be published by Budget Day 2016.
Deeds of Variation are often used for tax planning purposes. They are again to be reviewed by HMRC to see if any legislative changes are warranted on the basis that these Deeds are loosing tax for the Exchequer. If you are considering adopting a Deed of Variation then perhaps you should do it sooner rather than later.
The Government announced that the IHT exemption for medals and decorations awarded for valour or gallantry, such as to apply to all service decorations awarded to members of the armed forces and emergency services and to awards made by the Crown for achievements and service in public life, will be exempted form inheritance tax.
Peer To Peer lending
Currentrly interest received by investors under Peer To Peer lending arrangements is fully taxable but there is no coresponding relief for bad debts when lending goes wrong where the original loan was made from a non business source.
A new relief will be introduced from April 2016 to allow individuals lending under Peer To Peer arrangements to offset bad debts against interest received from Peer to Peer loans when calculating their taxable income
New anti avoidance / anti abuse measures are to be introduced in future Finance Bills
to mitigate perceived tax lost to the Exchequer.
The new rules will target tax avoidance through the use of multiple trusts and simplify the
calculations of inheritance tax on Trusts.
Automatic exchange of information
To help counter tax avoidance and evasion a new reporting standard (“CRS”) is to be introduced. The Government is going to invest in a new data analytical resource to maximise the yield from information reported by the CRS.
The CRS will improve the automatic exchange of information across the globe and is is intended to implement the principles of the US Foreign Account Tax Compliance Act (“FATCA”) across the globe.
IR35 and "umbrella" companies
The government plpans to clamp down on agencies, "umbrella" companies and personal service companies who abuse the temporary tax travel rules. Any changes will take place after "full and formal" consultation and would be intended to take effect from 6th April 2016 afetr being legislated in a future Finance Bill.
And finally ….. important reminder…Following the introduction of new regulations H. M. Revenue & Customs are now looking to check / investigate and attack any LLP partnerships which they view as being artificial "disguised employments".
All LLP partnerships should check their own situation most carefully.
Other information is detailed elsewhere in this site.
Please visit this page again after future Budget statements are made to view our comments.
Further information about UK tax and other legislation can be found here .....