Commentary - November 2015
1. Introduction
George's 2020 vision In the 2015 Autumn Statement, Chancellor George Osborne set out not only his spending plans and forecasts for revenue but also his vision for 2020. Whether George Osborne will still be Chancellor by then, or will have moved next door into the smaller house at number 10, remains to be seen.
The Government plans to invest £1.8bn in digital transformation by 2020. As we already know, this will involve replacing tax returns with online digital accounts. The new system is also to include the building of a 'simple payment' mechanism for all central government departments and a system for HM Revenue and Customs (HMRC) itself to 'simply' assess individuals.
What is new for the tax system is the Government's intention to introduce quarterly digital reporting to HMRC for most businesses and buy-to-let landlords. It seems that this will include most corporates and the self- employed. Will this be a much-needed advancement in the ever-evolving digital age? Or will this be an extra layer of red tape, potentially requiring businesses to prepare accounts and returns four times a year instead of once?
As part of the drive to force changes in the housing market to increase the availability of housing to those who wish to buy their own home, the Chancellor has announced further changes for buy-to-let landlords. These changes are intended to tip the playing field in favour of first time buyers, although it is not clear why the target is individual landlords and not also corporates. The property proposals include a 3% surcharge on stamp duty land tax (SDLT) on purchases of buy-to-let and second homes (though whether this covers house moves involving short periods of bridging remains to be seen). There will also be a speeding up in the reporting of capital gains and tax payments, within 30 days of the disposal of private houses not covered by private residence relief, and plans to look at speeding up SDLT reporting and payment.
The other main announcements on the tax front were more muted than feared, given the Chancellor has found quite a few £bn down the back of the Office for Budget Responsibility's (OBR) sofa. This means he does not have to dip into everyone else's pockets quite as much to fill the gap opened up by the recent tax credit debate. He has however, and not unexpectedly, included a large number of measures to further tackle avoidance and evasion, which are clearly well within the Chancellor's sights.
Further news on the devolved taxes and rates of tax to apply outside England is also starting to emerge, with the UK Government due to legislate to remove the requirement for the Welsh Assembly to hold a referendum to implement the Welsh rate of income tax.
As for the distribution of tax burden, the Autumn Statement confirmed that the highest income households pay the bulk of taxes. The forecast for 2019/20 indicates that the richest 20% of households will pay more tax than all the other households put together. Is this a tipping point beyond which the Government dare not go? Is this why the Autumn Statement was not quite as bad as some commentators feared?
As ever, details will gradually emerge over the coming weeks. Our tax teams will be trawling through the draft legislation, much of which is due to be published on 9 December, and technical notes as they become available. Time will tell whether George's 2020 vision was rose tinted.
Tina Riches
National tax partner
Download >> Autumn Statement 2015
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