Dallas- The Autumn Statement from Southfork Ranch

By Emma Drew

December 1, 2015

Dallas- The Autumn Statement from Southfork Ranch

Perkins Slade guest blog is brought to you by Claritas Tax Limited.

You would be forgiven for wondering what exactly George Osborne has in common with the Ewing brothers of Eighties Supersoap, “Dallas”, other than being delighted that he, and not Nicola Sturgeon, has all of the oil! However, we shall avoid comparisons between Jeremy Corbyn and Cliff Barnes and instead ask you to cast your mind back to the series after Bobby was murdered.

The series started with Bobby’s funeral and Pam’s grief but ended with her waking up from her nightmare to find Bobby alive and well and in the shower- well, it was a soap!

At Claritas Towers, we were reminded of that series as the Autumn Statement unfolded this afternoon.  We had endured a nightmare where entrepreneurs’ relief was cut or tightened and where employee shareholder status shares (often referred to as “shares for rights”) was abolished to compensate for the retreat on working tax credits.  In the end, we woke up from the dream to find the tax system almost as shiny and pleasant as it had been the night before and that none of our fears had come to pass.

The Autumn Statement was, therefore, relatively benign.  As usual, we shall leave the political discussions to the News at Ten and focus instead on the key points affecting our clients and friends.

Venture Capital Trusts and Enterprise Investment Scheme

All activities relating to energy generation will be excluded from being qualifying activities for VCTs and EIS purposes from next April.  This is the latest in a long line of announcements aimed at focusing these reliefs on trades perceived as higher risk.

The Government will introduce increased flexibility for replacement capital in the VCT and EIS schemes.  We have no more detail on this as yet, so it will be interesting to read the Finance Bill when it is published on 9 December to see whether this entails a relaxation of the restrictions on VCTs funding management buy-outs that was introduced in July.

Capital Gains Tax Entrepreneurs’ Relief

The only comment relating to entrepreneurs’ relief concerned changes which the Government will consider making to the legislation introduced in the March Budget.  Those changes concerned partnerships and joint ventures and to call them a dog’s breakfast would be to invite legal action from Pedigree Chum, so the acknowledgement that change may be needed is to be welcomed.

Stamp Duty Land Tax

A 3% surcharge to SDLT will be added to all purchases of second residential properties from April 2016.  This will clearly hit those with second homes and buy to let landlords.

Tax avoidance

For decades, converting income into capital has been the holy grail of tax planning- a 21st century version of alchemy!  The Treasury will introduce revised legislation in the Finance Bill to increase the effectiveness of the “transactions in securities” rules, under which certain capital gains are treated as dividend income for tax purposes.  This may well have an impact on certain part disposals of shares in companies and on some management buy-outs.  Amendments will also be made to the definitions of company distributions to support this. We will know more next month, but no changes should be introduced before next April.

Finally, the General Anti Abuse Rule (GAAR) is to be beefed up with the introduction of a new penalty of 60% of the tax avoided if tax planning arrangements are found to fall foul of the rule. The GAAR is HMRC’s nuclear deterrent, with tax avoidance schemes being required to pass through a so-called “double reasonableness” test, i.e. would a reasonable person find the actions you have taken reasonable? With the Chancellor looking to raise £5bn from a further crackdown on tax avoidance, the introduction of this new penalty is probably no surprise.

Future changes

Once again, the Chancellor has threatened the viability of salary sacrifice arrangements.  The Government states that it is concerned at the cost of these arrangements which cover everything from National Insurance free pension payments to cycle to work schemes and travel and subsistence arrangements.  For now, as in the last Budget, the Government will keep the arrangements under review.  The message would be, therefore, that if you wish to benefit from such arrangements, you should act now as the benefits may not last forever.

Conclusion

The Chancellor has allayed our greatest fears, at least for now.  We’ll do all of this again in two weeks’ time, of course, when the draft Finance Bill is published. Until then, as they say on Crimewatch, “Don’t have nightmares, do sleep well!”

How can we help?

If you would like more information on the Autumn Statement contact Claritas Tax to discuss this further.

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