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Autumn leaves

23 Nov 2016

Autumn”, according to the late French philosopher Albert Camus “is a second Spring when every leaf is a flower”.

The Autumn Statement is one of two statements H.M. Treasury has to make in response to the independent economic and fiscal forecast that the Office for Budget Responsibility provides every year. Since the 1990s, it has become customary for Chancellors of the Exchequer to combine their autumn response with tax and spending announcements. The result is that we have become accustomed to a second major fiscal event after the Budget each year.

The Chancellor, Philip Hammond, announced today “I am abolishing the Autumn Statement”. It is the Government’s intention, following the Spring 2017 Budget, to move the Budget to autumn each year. From Spring 2018 the Spring Budget will be replaced by the Spring Statement and Autumn Statement will be replaced by the Autumn Budget.

And so what blew in with this year’s autumn leaves?

  • The Government is still committed post the EU referendum to cut the main rate of corporation tax from 20% to 17% by 2020.

  • To tackle tax avoidance, measures against disguised remuneration tax schemes are to be extended to their use by the self-employed.

  • The capital gains tax, income tax and National Insurance contributions advantages of using Employee Shareholder Status schemes will be removed for new agreements entered into on or after 1 December 2016.

  • The Government’s tax policy consultation summaries (including the closed consultation on the taxation of non-domiciles) and the draft Finance Bill legislation will be published on 5 December 2016.

  • However we know the changes in this area will be broadly in line with the proposals. Non-domiciled individuals who have a non-UK resident trust set up before they become deemed-domiciled in the UK will not be taxed with effect from 6 April 2017 on the arising basis on income and gains realised outside the UK and retained in the trust.

  • A technical change with effect from Royal Assent Finance Bill 2017 will safeguard life insurance policyholders from disproportionate tax charges under current legislation by being given the right to apply to HMRC to have the charges that arise in certain circumstances from part-surrenders and part-assignments of their policies recalculated on a just and reasonable basis.

  • Another technical change will confer on the Government power to amend by regulations the list of assets that life insurance policyholders can invest in without triggering tax anti-avoidance rules for Personal Portfolio Bonds.

  • The annual charges for the Annual Tax on Enveloped Dwellings (ATED) will rise in line with inflation for the 2017 to 2018 chargeable period.

  • Foreign pensions and lump sums are to be brought fully into tax for UK residents, to the same extent as domestic ones, including updating the eligibility criteria for foreign schemes to qualify as overseas pensions schemes for tax purposes.

  • The defence of having relied on non-independent advice as taking ‘reasonable care’ when considering penalties for any person or business that uses a tax avoidance arrangement is to be removed.

  • At Budget 2017 the Government intends to consult on bringing non-resident companies’ UK income into the corporation tax regime.

  • The Government also intends to consult on a new legal requirement for intermediaries arranging complex structures for clients holding money offshore to notify HMRC of the structures and the related client lists.

  • The Government intends to introduce a new legal requirement to correct a past failure to pay UK tax on offshore interests within a defined period of time, with new sanctions for those who fail to do so.

If you would like to discuss any of these announcements in further detail, please contact a member of our Tax and estate planning team.

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