Following George Osborne’s Autumn Statement on 25th November, the draft Finance Bill 2016 was published on 9th December. We know roughly which topics will be included in Finance Bill 2016, from the Chancellor’s speech, but the nitty gritty detail is now in print.
It is said that the devil is in the detail, so what can we now expect that had previously not been revealed?
- 1. Construction Industry (CIS)
- From April 6th it will be much easier for subcontractors to retain gross payment status. Essentially the requirement to have your tax affairs in order and not to have blotted your copybook in the past, by say a late tax payment, is replaced by a simple requirement to be up to date with your CIS and PAYE payments and returns. As most sub-contractors receive a large tax refund each year because of the compulsory 20% deduction from all subcontractor payments, this is good news.
- 2. Anti-abuse legislation
- On the tax administration front the Revenue is planning civil sanctions for enablers of offshore tax evasion, criminal offence for offshore tax evaders, a new threshold condition for promoters of tax avoidance schemes and a serial avoiders special regime. In addition it has revealed policy papers on corporation tax anti-hybrid rules, penalties for the General Anti-Abuse Rule (GAAR) and the extension of new data-gathering powers.
- 3. Annual Investment Allowance (AIA)
- The AIA is to be cut on 1st January 2016, from the current £500,000 to £200,000
- 4. Other news
- The 10% wear and tear allowance for landlord’s let residential properties to be replaced with a renewals basis from 6th April 2016, had previously been announced. But now they’ve revealed that on top of this, no deduction will be permitted for the initial cost of the furnishings.
- 1. Travel & Subsistence
- From April 6th many workers on short-term contracts and individuals working through PSCs subject to IR35 will no longer be able to claim tax relief on travel and subsistence expenses when they commute from home-to-work.
- 2. Trivial Benefits
- These days, it is rare for me to unreservedly welcome a new piece of legislation, but this is the case with trivial benefits. There will now be a simple exemption of £50 per non-cash or voucher benefit up to a maximum of £300 per year.
- 3. Sporting Testimonials
- For almost a century, the proceeds of sporting benefits or testimonials have been deemed to be outside the tax net; based on the logic that these were gratuitous payments by grateful members of the public who appreciated the pleasure that the relevant individuals had given them. Unfortunately, over time the bigger sporting stars have used highly polished fund-raising machines to maximise income, which can amount to millions.
- The inevitable consequence in these straitened times is a restriction of relief to £50,000 of income. This should have minimal consequences for many low profile professional sports people. It might then be argued by the man in the street that the ultra-rich superstars can affords to pay the tax that will now arise.
- 4. Other news
- The rules on company share schemes have been relaxed and now you’ll have 90 days instead of 40, to dispose of your shares without lose tax relief after a qualifying event such as the cessation of employment or retirement and potentially longer, if you have a reasonable excuse, such as illness.