Its been 2 hours since George Osborne sat down and here are my thoughts:-

Contractors

No new announcements which affect contractors, contrary to the rumours prior to the Autumn Statement, including alarming press articles than suggested that contractors could be forced onto the payroll after one month on contract.

No changes to IR35 however the Government is still considering responses to its recent discussion document, so changes may be announced in the future.

Dividend tax hike from April 2016 set to go ahead as announced in July

Tax relief on travel and subsistence expenses will be restricted from 6th April 2016. The July Budget stated that the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies but draft legislation will be published on 9th December 2015 so we will have to wait and see.

Tax Administration

The Government will invest £1.3 billion to transform HMRC into “one of the most digitally advanced tax administrations in the world”, providing all businesses with an online tax account which will be updated quarterly. 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 – more administrative burden!

Buy to lets/second homes

Stamp duty to be increased by an additional 3% for buy-to-let and second home buyers from 1 April 2016.   This won’t affect existing landlords but will deter those looking to enter the market. This is on top of changes to mortgage interest tax relief due to be phased in starting 2017, and the changes to the 10% annual wear and tear allowance starting April 2016.  Buy to lets, an essential source of housing, are becoming less and less attractive for investors.

Capital gains tax payments

From April 2019, a payment on account of any CGT due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal. This will not affect gains on properties which are not liable for CGT due to Private Residence Relief.  This is a complex calculation and sellers could miss out on valuable reliefs if left in the hands of the Conveyancer who already has to deal with SDLT returns.

Company car drivers

Contrary to previous announcements, the diesel supplement of 3% will now not be withdrawn until 2021.

The highlight of the Budget was the proposed radical reform of pensions.  It will be extremely interesting to see how this pans out.  The tax advantages of paying into a pension are well known and the ability to have more freedom in how the funds are drawn on retirement will make this an extremely interesting planning opportunity.  Watch this space!

Pensioner Bonds and super ISA’s were also good news for savers.

For businesses, the small companies profits’ rate remains at 20% in 2015 and the VAT registration threshold will rise (as it usually does every April) to £81,000. The doubling of the AIA to £500,000 is good for businesses with a larger capital investment programme.  Raising the personal allowance to £10,500 is welcome but there needs to be a similar rise in the NIC threshold to ensure no tax or NI before £10,500.  One bonus is that we have the £2,000 employment allowance against employers NIC from April 2014.

Business Tax Summary

Annual investment allowance to double from £250,000 to £500,000 from 1 April 2014 until 31 December 2015

R&D tax credit increased from 11% to 14.5% from April 2014

SEIS and rollver relief made permanent

VAT threshold increased in line with inflation to £81,000

Housing boost -Help To Buy extended to 2020 and £500m Builders Finance Fund

Increase in company car rates – The fuel benefit charge multipliers for both company cars and vans will increase in line with inflation for 2015 to 2016. Discount for low emissions improved

£85m promised for extra apprenticeship grants

Rates relief extended for small businesses

Personal tax summary

Personal allowance to rise to £10,500 in 2015/16

Class 2 NIC moved into SA from 2016-17

ISAs merged and limits increased to £15,000

Increased pension flexibility – amount that can be taken out as a taxed lump sum rises to £30,000 from 27 March 2014

Anti-avoidance and tax administration

Upfront payments for disputed schemes to start this year

Net widens in stamp duty clampdown

The House of Lords Economic Affairs Committee has recommended that changes in the taxation of limited liability partnerships should be delayed until April 2015 in order to give firms affected an opportunity to adjust.

HMRC and the Treasury are concerned that limited liability partnership structures allow “disguised employment” to take place, whereby some people that take the title of “partner” in fact have a guaranteed income and little decision-making power. The worry for the government is that the well-established arrangement gives rise to tax discrepancies.

Guidance released in February shows that, despite widespread adviser disquiet over the breadth of firms that could be caught within the regime, officials are pressing ahead with its introduction.

Under the draft proposals, partners must satisfy one of three tests in order to maintain their status:-

• the first option is ensuring at least a quarter of their pay is profit-dependent
• the second would see them contribute at least 25% of their ‘fixed pay’ to the firm’s capital; or
• the third option is to prove they have significant influence on the overall partnership.

If partners are deemed to be employees, then Employers NIC at 13.8% will be due and other employment-related tax rules, such as benefits in kind, will apply to them.

13/3/14

I have been very lucky to meet a number of new clients since I started my business.  Many are very computer literate and have been able to file their own Tax Returns using the HMRC form filling facility and without needing to use the services of a Tax Adviser.  But time and time again, my detailed knowledge of the tax system has led to additional claims which can bring about real tax savings.

One of the main areas of overpayment often relates to National Insurance .

There are four main types of National Insurance: Class 1 is payable by employees and employers, Class 2 is a flat rate payable by the self employed, Class 3 is voluntary contributions paid by people who want to complete their National Insurance record for benefit purposes, but are not otherwise liable to pay National Insurance, and Class 4, which payable on profits above a set level by the self employed.

National Insurance, unlike income tax, is only payable by people who are 16 or over and under the state pension retirement age.

It is possible to overpay National Insurance. This may happen, for example:

• if you pay Class 2 National Insurance as a self-employed person and later find that your profits were below the small earnings limit,
• if you have paid National Insurance after reaching the state pension age,
• if you are highly paid and have more than one employment or are employed and self-employed on high earnings.

There are different time limits for applying for refunds, depending on the sort of National Insurance and the reason for the overpayment.  But if you think you might be paying too much National Insurance and would like to discuss this in more detail, please do not hesitate to contact me.

Around 110,000 parents are still yet to register for a 2012/13 Tax Return after claiming child benefit.

Child benefit is worth £20.30 per week for the first child and £13.40 per week for each subsequent brother or sister.

It follows changes that came into force in January 2013 where households with someone earning more than £50,000 lose a proportion of the benefit. Households where the highest earnings has a salary of £60,000 lose the benefit entirely.

Parents who received child benefit between January 7 and April 5 2013 have to fill in a self-assessment form for 2012/13 to quantify the tax and the deadline for paying the tax due is 31 January 2014.

Thereafter penalties between 10pc and 100pc of the tax owed can apply.

To avoid any penalties, parents should register for self-assessment as soon as possible.

You can opt out of receiving child benefit at any time by filling in a form on the HMRC website.  However, higher income parents who have been receiving child benefit since 7 January 2013 will still need to complete a 2012/13 Tax Return to declare the benefit received.

If you need any assistance, please do not hesitate to contact us.