The Autumn Statement – Blake Morgan round-up
Aside from the surprise climb-down on future tax cut credits, there were few major surprises in today’s autumn statement. Chancellor George Osborne confirmed significant spending cuts in transport, environment and energy, but left policing, health, education and defence unscathed.
Here is Blake Morgan’s round-up of some of the headline points – and some you may have missed.
Buy-to-let and property
A new 3% surcharge on stamp duty for buy-to-let properties and second homes is due to come into effect from April 2016. This may have significant implications for investors who may find buy-to-let a less attractive option in the longer term. Elysa Jacobs, solicitor in Blake Morgan’s private client team, has more on this here.
Capital gains tax will have to be paid within 30 days of selling a residential property under changes due to come into effect by 2019. This change will bring the due date forward by around 18 months in some cases and has other effects for investors. James Greig, partner in the private client team blogs on this and Inheritance tax changes here.
The Chancellor gave further details of the Apprenticeship Levy announced in the Budget on 8 July 2015. In August, a Consultation was published to look at the implementation of the levy, but the rate and scope of the levy was to be announced later. The Levy is to be applied to larger employers, with the idea that all employers (whether they are within the scope of the levy or not) are able to access the funding it produces. Today the Chancellor announced that the levy would be introduced in April 2017 at a rate of 0.5% of an employer's wage bill, with each employer having a £15,000 allowance to set off against that sum. This means that any business with a payroll of less than £3m will not pay the levy at all.
There were minor changes to workplace pensions – the Chancellor confirmed that the increase in minimum contribution levels for automatic enrolment (or workplace pensions) is being delayed by six months. This means the increase from 2% (overall) to 5% will now come into force in April 2018 instead of October 2017, and the further increase from 5% to 8% which was due to take effect in October 2018 is now held up until April 2019.
Adrian Lamb, Legal Director in Blake Morgan’s Pensions team, says: “Today’s announcement means that the minimum employer contribution, which is now 1%, goes up to 2% in April 2018 and 3% in April 2019. The rest of the increase will come from higher employee contributions which could have increase pressure on wage inflation in due course – and it should be remembered that by the time these increases are in force the Government will be reviewing the contribution levels for the future – and all commentators expect that these will have to rise considerably."
The Chancellor announced that the commitment to fund 30 hours of free childcare for working families with 3 and 4 year olds, and tax-free childcare costs, would now only be available to parents with an income level equivalent to 16 hours a week (at the National Living Wage) and an income of less than £100,000 per parent.
Employment Intermediaries tax relief
The Government launched a consultation at the summer Budget in July on 'Employment intermediaries and tax relief for travel and subsistence', about which an announcement was expected today. The consultation looked at restricting tax relief for home-to-work travel and subsistence for those who are employed by an intermediary, such as an umbrella company or a personal service company (PSC). The intention, in relation to commuting costs, is to put on a level playing field those who are in a deemed 'employment relationship' even if they work through another company.
Nothing was forthcoming in the Chancellor's speech, but buried in the the Spending Review and Autumn Statement papers the Government has confirmed that 'Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016.' The Government's Response to the Consultation does not yet appear to be available.
Modernising courts and tribunals
The Government announced that in this Spending Review it is "increasing total investment to more than £700 million to modernise and fully digitise the courts, moving from a paper-based to an online system." Lawyers will already be aware of Government plans to sell off and combine underused courts.
The NHS in England will get an upfront cash injection of £6bn next year as part of £10bn added funding. But it will be expected to make £22bn in efficiency savings.
Grants for student nurses are to be scrapped and replaced by loans, and a cap on training place for nurses will be scrapped. The government hopes this will increasing the number of trainees by 10,000.
The introduction of a new social care precept in the council tax of up to 2% is designed to allow local councils to raise a combined £2bn for social care.