Review of the UK Chancellor’s Autumn Budget Statement
The Chancellor revealed the Autumn Statement and spending review on Wednesday 25th November. Below is a summary of some of the key changes that may affect your UK taxes:
From the 1st April 2016 individuals will have to pay an extra 3% in stamp duty when they purchase an additional property (e.g. a buy-to-let property or second home). Mr. Osborne claimed that the additional funds raised from this scheme will be used towards helping individuals buy their first home and also towards encouraging house builders to construct starter homes.
Further to this, the chancellor had announced in the summer budget that there will be a reduction to profits for landlords as he will be phasing out the mortgage interest tax relief from April 2017. Landlords will only be able to claim the basic rate of rate as relief (20%) on monthly interest repayments instead of the current rate of 45%. This is in an effort to level out the playing field between first-time buyers and investors, however, it is thought that landlords may increase rents in order to compensate.
Capital Gains Tax
Currently a taxpayer can pay the Capital Gains Tax due on a residential property between 10 to 22 months after the disposition of the property. However, from April 2019 the proposed changes will mean that Capital Gains Tax must be paid within 30 days of the sale of the property. Even though this change is unlikely to affect most taxpayers, as they will be covered by Principal Private Residence Relief, it is likely to present an administrative burden to those taxpayers who do owe capital gains tax on the sale of their property.
Councils which have a responsibility for social care will be able to add 2% to council tax bills in order to raise additional funds for the care.
The contribution limit on ISA accounts will remain the same from 2015/16 to 2016/17 at £15,240. Child’s Junior ISAs and Child Trust Fund limits will also be kept the same from 2015/16 to 2016/17 at £4,080.
Changes to tax reliefs on pension contributions were expected in the Autumn Statement, however, the decision on the changes is likely to be revealed in the budget of March 2016. Changes are thought to hit higher rate and additional-rate taxpayers who may lose tax reliefs on pensions. The government are looking into different options including removing upfront tax reliefs so pensions become similar to ISAs or introducing a 33% flat rate of tax relief.
If you have any questions about your UK tax affairs or would like to understand better how the Autumn Statement affects you, please feel free to contact us.