Other matters

Stamp duty land tax (SDLT): additional properties

Higher rates of SDLT will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes, from 1 April 2016. The higher rates will be three percentage points above the current SDLT rates.

The higher rates will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property. The government will consult on the policy detail, including on whether an exemption for corporates and funds owning more than 15 residential properties is appropriate.

Comment

The Chancellor stated that ‘more and more homes are being bought as buy to lets or second homes’ and ‘frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy’.

SDLT: changes to the filing and payment process

The government will consult in 2016 on changes to the SDLT filing and payment process, including a reduction in the filing and payment window from 30 days to 14 days. These changes will come into effect in 2017/18.

Tax evasion

The government has announced a number of measures aimed at tax evasion. These include:

• a new criminal offence that removes the need to prove intent for the most serious cases of failing to declare offshore income and gains
• an increase in civil penalties for deliberate offshore tax evasion, including the introduction of a new penalty linked to the value of the asset on which tax was evaded
• introducing civil penalties for those who enable offshore tax evasion
• a new criminal offence for corporates which fail to prevent their agents from criminally facilitating tax evasion by an individual or entity.

Tax avoidance

Some anti-avoidance provisions have been announced. These include the introduction of:

• new measures for those who persistently enter into tax avoidance schemes that are defeated by HMRC. These include a special reporting requirement and a surcharge on those whose latest return is inaccurate due to use of a defeated scheme
• a new penalty of 60% of tax due, to be charged in all cases successfully tackled by the General Anti-Abuse Rule.

Making tax digital

The government will publish ‘plans to transform the tax system’ and will consult on the details in 2016. Most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. This will not apply to individuals in employment, or pensioners, unless they have secondary incomes of more than £10,000 per year.

Comment

A digital tax account will enable a taxpayer to get a real-time view of their tax affairs and see how their tax is calculated. Businesses which pay more than one tax (such as income tax, VAT and PAYE) will be able to view their total liabilities across all taxes.

The government will invest £1.3 billion to ‘transform HMRC into one of the most digitally advanced tax administrations in the world’.

Simple assessment

The government will publish draft legislation that will enable a new process for paying tax. This will be used for taxpayers in self assessment who have simple tax affairs where HMRC already holds all the data it needs to calculate the tax liability, and where existing payment processes are not available. Taxpayers will be sent a calculation which will be a legally enforceable demand for payment, and taxpayers will be able to challenge and appeal these calculations. This process will come into effect in the 2016/17 tax year.

Taxation of sporting testimonials

The government will legislate to simplify the tax treatment of income from sporting testimonials. From 6 April 2017, all income from sporting testimonials and benefit matches for employed sportspersons will be liable to income tax. However, an exemption of up to £50,000 will be available for employed sportspersons with income from sporting testimonials that are not contractual or customary. This legislation will apply where the sporting testimonial is granted or awarded on or after 25 November 2015, and only to events that take place after 5 April 2017.

Gift Aid Small Donations Scheme (GASDS)

GASDS allows eligible charities and Community Amateur Sports Clubs to claim a Gift Aid style payment on small cash donations of up to £20. From April 2016, the annual donation amount which can be claimed through the GASDS will increase to £8,000. The government is going to review the operation of this scheme to ensure it is operating as effectively as possible.

VAT on sanitary products

The government has set up a new fund that will make available £15 million a year, equivalent to the annual VAT raised on sanitary products, to support women’s charities. This will continue over the course of this Parliament, or until EU rules are amended to enable the UK to apply a zero rate.

Comment

This is an example of social media in action. A petition, signed by 300,000 people, argued that no VAT should be charged on sanitary products. VAT is already charged at the lowest 5% rate allowable under European law. The suggestion to use the funds for charitable purposes was made to the Chancellor by an MP and is similar to the way the government use LIBOR fines.