Focus on reliefs for investment and tightening avoidance
The chancellor’s Autumn Budget did not surprise after all, despite some predictions that he might go all out and unveil a radical Budget.
However, the reality of constrained finances and delicate politics, meant he could do very little.
Allowances and rate bands
The good news is that he continues to aim for the 2020 goal of a £12,500 personal allowance and £50,000 starting point for higher rate taxpayers, with increases towards this from April 2018.
He also introduced a valuable first-time buyer stamp duty land tax (SDLT) exemption, worth up to £5,000. But unless those buyers are acquiring new build property, uptake could be limited as there is no incentive for existing owners to upsize their properties with the rates of SDLT generally remaining high.
We had a concern that the level of relief for tax efficient investments via the Enterprise Investment Scheme and Venture Capital Trusts might be reduced given they could be seen as being over generous.
In the end, the chancellor viewed this as a good source of funding for ‘knowledge-intensive companies’, broadly companies involved in the creation of intellectual property (but the definition is much wider). For these companies, individuals as can now get relief on a greater amount of investment (up to £2m).
With a focus on recent new events, offshore trusts remain in the spotlight. We were already aware of new anti-avoidance rules coming in from April 2018, but we await the response to a new consultation, to be published on 1 December, with more information on which offshore arrangements need to be notified to HMRC in advance.
HMRC will also be extending the minimum time limit for enquiries into offshore matters, to a minimum of 12 years where there has been non-compliant behaviour.
Trusts generally will be under scrutiny again – both UK and offshore trusts – with a consultation next year on making their taxation ‘simpler, fairer and more transparent’. It’s unlikely to be good news for taxpayers with trusts.
Making Tax Digital
We have had little update on Making Tax Digital but we should have more news with the Finance Bill to be published on 1 December 2017.
HMRC has noted that it will be looking at rent-a-room relief which currently allows up to £7,500 of income to be received annually, tax free, from renting a room in your main home. The call for evidence next year will ask whether it still meets the original objective.
Those who qualify for the 10 per cent capital gains tax entrepreneurs’ relief rate will be pleased to know that HMRC will be looking at whether they can continue to qualify even if their holding drops below 5 per cent because of commercial external funding.