“Autumn statements have an existence of their own, independent and distinct from budgets,” said George Bull, senior tax partner at RSM. “But to be honest, the picture begins to blur so that many will feel that the 25th November autumn statement is all too much like another budget, the third in a little over eight months.”
Tax Triple Lock
“Cuts in reliefs in respect of inheritance tax (IHT), pension contributions, and interest on business borrowings could feature high on the chancellor’s shortlist,” predicts Tina Riches, national tax partner at Smith & Williamson.
Under pressure to increase tax revenues, chancellor George Osborne’s hands are tied as a result of the “triple lock” on the headline income tax, National Insurance, and VAT rates – which combined account for nearly £385bn (€549bn, $584.6bn), almost three quarters of the £515bn tax receipts for 2014/15.
“To be honest, most people would like a break from the ceaseless flood of tax changes we have seen over recent years."
“So now that a straightforward percentage increase to any of the three main taxes is off-limits, Mr Osborne’s mind needs to focus on enlarging the tax base and other tweaks that will raise revenue. However, continual change causes complexity on top of what is already an opaque and very lengthy tax code,” Riches added.
Changes for non-doms
Mark Davies, managing director of Mark Davies & Associates, expects an update to the reform on the taxation of non-doms, which would mean that those who have resided in the UK for more than 15 of the past 20 tax years would be deemed UK-domiciled.
“The government has recognised that non-doms claiming the remittance basis make a considerable contribution to the UK Exchequer (paying £4.91bn of income tax in 2013-14) and the chancellor is trying to balance the inability for long-term residents to claim the remittance basis with beneficial changes to the taxation of trusts,” Davies explained.
“The government is proposing to change how the income and gains within trusts are taxed now to the point when a beneficiary takes a benefit. We expect to see how that benefit might be calculated and what rate of tax might be charged. We expect that the legislation due to be enacted in Finance Act 2016 will be pushed back to Finance Act 2017 due to the complexity of the changes.”
