
Overall, tacking tax avoidance continues to be a government priority, with £800m being invested over the next five years into tackling avoidance and addressing imbalances in the tax system. It is hoped this will generate a further £5bn in revenues and 100 prosecutions a year.
To improve tax compliance among small businesses that are trading but not declaring or paying tax, the government is proposing to give HMRC greater powers to acquire data from online business intermediaries and electronic payment providers to help identify revenues. A consultation will begin to review these proposals this month.What else is coming up for taxpayers?
The non-dom tax rules are being significantly changed to ensure that “those who choose to live in the UK for a long time pay taxes here like everybody else”. From April 2017, anybody who has been resident in the UK for more than 15 of the past 20 tax years will be deemed UK-domiciled for all tax purposes and subject to the same rates of tax on any income. As part of this shake up, it will also no longer be possible for somebody who is born in the UK to parents who are UK domiciled to claim non-domicile status if they leave but then return and take up residency in the UK, effectively bringing an end to the current “permanent non-domicile” status. In addition, from April 2017 the ability for non doms to avoid inheritance tax (IHT) by holding their property within an offshore structure is also being removed. This applies to all UK properties owned by a non-dom, regardless of value and whether the property is let or occupied. However, there is good news on the IHT front, as with effect from April 2017 a “family home allowance” is being introduced. Initially this starts at £100,000 and will increase to £175,000 by April 2020. The aim is that eventually estates with a value of up to £1m will be able to be passed to immediate family without an IHT liability. As with the existing nil rate band of £325,000, any unused allowance can be passed onto a surviving spouse. It should be noted that where the value of the estate exceeds £2m, there will be a clawback of the allowance. Landlords with a buy-to-let property portfolio are impacted by the Budget in two ways. Firstly, the current relief for mortgage interest is being restricted to only give tax relief at the basic rate (currently, higher rate taxpayers get additional tax relief of up to 45p for every £1 of finance costs); this will be phased in over 4 years. In addition, the automatic entitlement for landlords of furnished property to claim a flat rate 10 per cent annual allowance for wear and tear, irrespective of how much maintenance cost was actually incurred, is being removed from April 2016. Instead tax relief will be available to all landlords of residential property for the actual costs incurred.- George Osborne says tax dodgers have “nowhere to hide”
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Key summer Budget changes affecting businesses
Corporation tax will be reduced from the current 20 per cent to 19 per cent from 2017 and 18% from 2020 for all UK companies. The Employment Allowance will be increased from £2,000 to £3,000 a year to help offset the cost to employers of the new National Living Wage of £7.20 being introduced in April 2016. However, it should be noted that with effect from April 2016, the Employment Allowance cannot be claimed where the director is also the sole employee of the company. The Annual Investment Allowance, which was due to drop to £25,000 from December 2015, will now increase to £200,000 a year on a permanent basis starting from January 2016. This is good news for many businesses as it means that typically all capital expenditure will get full tax relief in the year of acquisition. One change, which may have very wide reaching implications, is the announcement to review the taxation of dividends. This impacts both investors with investment portfolios and company owners who take their remuneration in the form of dividends.Share this story