Could this year’s Autumn Statement contain good news for private clients?

15 November 2016

Gary Heynes

We expect to see a number of announcements that will impact private individuals. We hope for some good news on a delay to complex changes for non-doms due to be rushed in in April 2017 and are optimistic about the likely simplification for many small businesses and landlords. 

As mentioned in this week’s Tax Brief, this Autumn Statement is the chance for the new Chancellor to set out his own course, rather than being bound by the former Chancellor’s strategy. Now is surely the time to ensure minimal loss of tax revenue as UK and overseas politics impacts on the UK’s economy.

While it’s clear that changes to the taxation of non-doms have been coming for some while, there are wider implications which could be scaled back or delayed. The new deemed domiciled status, achieved after being resident in the UK for 15 years out of 20, appears to be well on the way to becoming law in April 2017. However, changes to the taxation of offshore trusts and UK residential properties held via offshore companies could be reviewed further, due to a very late consultation and the complexities of current proposals. This could mean a delayed implementation, sensibly giving taxpayers, caught by retroactive rules, to rearrange their affairs in a reasonable time frame.

Another key area for individual taxpayers is the government’s proposals for simplifying the tax position for sole traders and partnerships, as well as property landlords. Tax is normally paid on profits calculated on the accruals basis, being the income due to be received less any expenses due to be paid. This can result in timing differences and more complexity in drawing up accounts.

The ‘cash basis’ is a more straightforward way of calculating profits based on what income has been received, less any expenses actually paid and the government intends to allow up to 175,000 more businesses to take this route for their accounts as part of the move to Making Tax Digital (MTD). MTD will see the need for taxpayers to regularly provide information on their profits to HMRC and using the cash basis will simplify that interaction for many taxpayers. Simplifying the tax reporting for many more small businesses should encourage greater entrepreneurship and we would welcome the changes going as far as possible.

If you would like any more information on this issue please get in touch with Gary Heynes or your usual RSM contact.