South: EY comments on Autumn Statement

Gareth Anderson, tax partner at EY across the Thames Valley and South Coast, commented on the Autumn Statement:

Mini Budget or merely a trailer?

The chancellor has delivered on one promise – to make the Autumn Statement more about the economy and less of the mini-Budgets of his predecessors. Today was less of a mini Budget and more of a trailer for what’s yet to come.

We saw business rates reform deferred until the Budget next year (so bad luck for retailers and manufacturers who pay 23% and 17% of the burden respectively). Also, those worried about salary sacrifice were given a further reprieve, with the depths of the document noting that the Government was ‘gathering further evidence’.

However, the sky blue document also heralded in almost £21 billion in tax rises over the six-year period, of which the Apprenticeship Levy is meant to raise over half. The rest will come from tax avoidance, evasion, and planning as well as those who seem to be portrayed as the new villains of the day, those who have buy-to-let or second properties.

With limited detail announced today, we have to wait two weeks to Legislation Day on December 9 when we see the draft Finance Bill.

Pay up and pay up faster…

The chancellor wants us all to pay and to pay up faster, as his Autumn Statement accelerated when tax is paid.

First we have Capital Gains Tax for residential property (effectively buy-to-lets and second homes), who now have to pay almost 21 months earlier and now the Government is looking at shortening the window for paying stamp duty from 30 days to 14. Following on from the Summer Budget’s advance of corporation tax, the chancellor seems to have found a seam of gold that he wants to continue to develop.

So what taxes will be next?  With the chancellor announcing the digitisation of HMRC, we can expect him to keep mining for some time.

Charities tax relief: It is the season of giving …

In addition to his more high-profile charity announcements, the chancellor made a lower-key but nevertheless welcome change. The change removes charities from punitive tax rules designed to prevent individuals and trustees from extracting money from private companies by way of loan.

Currently, if a company with five or fewer shareholders lends money to its shareholders, which may include a charity, a tax charge can be triggered. The chancellor has recognised that this can frustrate charitable intentions and so has introduced a tax relief.

Although largely a technical change, in the season of giving, charities will welcome this relaxation in the rules which tax advisers have been asking for since 2013.  The devil will of course be in the detail and we will need to look carefully at the new rules to be sure that no charities remain trapped in a net that was never designed to catch them.