UK Autumn Statement – Key Points Around Taxation to Note
The Chancellor’s Autumn Statement provided several changes and new provisions to consider, the most relevant of which are summarised below.
Under existing rules taxpayers have to pay stamp duty land tax at a single rate on the entire, property value. Under the Autumn Statement taxpayers are now only required to pay the rate of tax based on graduated tax rates, similar to income tax. The new, graduated tax rates are shown below based on the house value:
£125,000 – 0%
£125,001-£250,000 – 2%
£250,001-£925,000 – 5%
£925,001-£1,500,000 – 10%
£1,500,001 and over – 12%
These new rules were set in place on the 4th December 2014.
Personal Allowance Increased to £10,600
From the 6th April 2015, the personal allowance will increase from £10,000 to £10,600.
Spouses will inherit their partner’s ISA benefits after their death
Under the old rules, if someone passed away their surviving spouse or civil partner would inherit their ISA but lose its tax-free status. However, the new rules, which were active from the 3rd December, enable a taxpayer to pass on their ISA benefits to their spouse or civil partner.
Harsher tax rates on multinational companies who perform substantial work in the UK but currently avoid corporation tax through complex tax schemes
The government has said that it will tax a company’s profits at 25% if it deems that a company is avoiding paying UK tax by diverting the money abroad, even though a substantial amount of the work was performed in the UK.
Remittance Basis Charge Changes
The government has previously stated that it would not make any further changes to the taxation of non-domiciles for the 2010-2015 parliament. However, the autumn statement introduced a few changes which could have a significant impact on how non-domiciled taxpayers choose to file their taxes (i.e. report their worldwide income on the arising basis or maintain the remittance basis).
The annual charge for taxpayers who have been resident in the UK in 12 out of the last 14 UK tax years has increased from £50,000 to £60,000. However, where a taxpayer has been resident in the UK in 7 out of the last 9 UK tax years, the £30,000 charge still remains.
There has also been the introduction of a new £90,000 charge for taxpayers who have been resident in the UK more than 17 out of the last 20 UK tax years.
The above changes will be effective from 6th April 2015.
It should also be noted that the chancellor has announced that the government would be consulting on making the election to pay the RBC apply for a minimum of 3 years. The aim of this would be to reduce the ability of non-UK domiciled individuals to arrange their tax affairs so as to only pay the RBC occasionally.
If you would like advice about your personal tax situation or how any of these changes may affect you, contact us.