May you live in interesting times...

...is both the title of a favourite book of mine and also an ancient curse (think about it). We're certainly living through uncertain times for families and businesses around the world, not just in the UK. To paraphrase a line from another book "people think they want good government and justice for all, yet what is it they really crave, deep in their hearts? Only that things go on as normal and tomorrow is pretty much like today." I think never has that sentiment felt truer than it does at the moment.

For all those of us out there working from home, or who have been furloughed from work (or worse still those unlucky ones who've been made redundant), or those who are supporting the rest of us in key roles we are certainly living in "interesting times" right now.

I know this is primarily a "tax blog", but just occasionally I do like to share my musings on the wider political and economic situation. I understand that there is a great deal of negative news and rhetoric out there at the moment, and I don't want to focus on that (and I'm not trying to discount it), what I want to think about are the positives that could yet come out of this in relation to the way its affected our working lives.

The biggest positive impact (for business and employees, and probably the environment) of course has to be the proof positive that remote working, in some capacity at least, does work. This is something that some of us have known for years, indeed I've often said I can get three days of "office" work done in a single day working from home. So, perhaps we'll see some of this start to creep back in when we get back to "normal", whatever that might look like. Another that is also pretty obvious, is that it has forced almost all of us to use virtual/video meeting software. Whether that's just to call up Mum and Dad because you miss seeing their faces, or to have a meeting with a client on the other side of an ocean, more and more of us are getting comfortable with it. For business, this just makes the world smaller and therefore easier to do business in. What was usually the domain of large multinational businesses should now be able to be accessed by everyone (I do it from my small back bedroom home office all the time!).

How about the economics of our interesting times? Well, I hear a lot of talk about the world economy being put on pause, and that is really how it feels. If you read such things as the Times rich list (oh my god why?!?), or look at the stock markets, then yes, the world did take a hit, but financial markets have always gone down as well as up, what's new? Taking that into account, the markets were due a correction, and have now recovered to much more sensible levels from the original 25%+ drop in March and early April. Consider as well that the whole world has been affected, this isn't just a country or event continent isolated event, everyone really is in the same boat this time.

Times are hard, for some of us they always are, but sometimes in the darkest of times can the greatest opportunity be found...

Budget 2020: The REAL News (well, my quick thoughts)

As always, a lot of the tax detail gets buried in the Chancellor's budget day speech, we get lots of little sound bites about tax on beer and such, but little detail on the big movements.

So, what devil has our new Chancellor, Rishi Sunak, left in the detail for us to extract...

We have of course seen the MASSIVE shift in entrepreneurs relief. Now, I'm not claiming any Nostrodamus level foresight here, as I think most of the profession guessed the most likely movement here would be a reduction in the lifetime allowance rather than a full abolition of the relief. This will see the government will introduce legislation in Finance Bill 2020 reducing the lifetime limit on gains eligible for Entrepreneurs’ Relief from £10 million to £1 million for qualifying disposals made on or after 11 March 2020.

We also saw the MONUMENTAL give away of £104.16 per annum as a result of the National Insurance limit increase. Yes, I am being sarcastic, as I do get annoyed by things like this when politicians crow about it as if giving people an extra £2 a week is like them winning the lottery!

Something many might have missed will be the change to the tapered annual allowance for pensions . The two tapered annual allowance thresholds (currently £110,000 and £150,000) will each be raised by £90,000, and the minimum tapered annual allowance will be decreased from £10,000 to £4,000 from 6 April 2020. So, from 2020 to 2021 and subsequent years the threshold income limit, the point at which an individual is assessed for the taper, will be £200,000, and the adjusted income limit, the point at which the annual allowance begins to reduce will be £240,000. Many business owners (and government employees no doubt) will welcome these changes following recent difficulties after the tapering rules were brought in.

There's a load of other stuff in the OOTLAR - Overview of Tax Legislation and Rates, which can be found here (https://bit.ly/2U0OqGQ), happy reading!

Ever wonder where your tax goes? Well, let me tell you

Have you ever wondered where your income taxes go? Well, the good news is that if you have a personal tax account (it's easy enough to obtain one, see here) you can. However, to save you good people the trouble, I went and looked at mine. This is on a percentage basis how my taxes got spent (everyones should be the same):

Description	2017-18	2016-17	2015-16	2014-15	Avg.
Welfare	23.8%	24.3%	25.0%	25.3%	24.6%
Health	19.9%	20.3%	19.9%	19.9%	20.0%
State Pensions	12.8%	12.9%	12.8%	12.8%	12.8%
Education	12.0%	12.3%	12.0%	12.5%	12.2%
National Debt Interest	6.1%	5.5%	5.3%	5.0%	5.5%
Defence	5.3%	5.2%	5.2%	5.4%	5.3%
Public Order and Safety	4.3%	4.2%	4.3%	4.4%	4.3%
Transport	4.3%	4.2%	4.0%	3.0%	3.9%
Business and Industry	2.9%	2.5%	2.4%	2.7%	2.6%
Government Administration	2.1%	2.1%	2.0%	2.0%	2.1%
Culture	1.6%	1.6%	1.6%	1.8%	1.7%
Environment	1.6%	1.6%	1.7%	1.7%	1.7%
Housing and Utilities	1.6%	1.5%	1.4%	1.6%	1.5%
Overseas Aid	1.2%	1.1%	1.2%	1.3%	1.2%
UK Contribution to the EU	0.7%	0.7%	1.1%	0.6%	0.8%

I have shown the percentages for the last four years, and it throws out some interesting results. Largely the biggest shocker is that the percentages stay pretty stable over the four years, although there are a couple of culprits that seem to deviate from the average, principally spending on welfare and national debt interest.

HMRC helpfully also published a paper in November 2018 detailing how much tax they've collected (it can be found here), it really is a great cure for insomnia, I recommend it. However, if you just want to know how much tax the government collects check out page 4. Interestingly the "tax take" has been increasing year on year for some time. To get another idea of just how many different types of tax there are, you could do worse than looking at the Taxpayers Alliance.

I don't intend to draw any political conclusions, that's not my place (I'm a tax advisor after all, not a politician), but I will leave you all with one Brexit related fact though. The median annual income in the UK, according to the most recent Annual Survey of Hours and Earnings, is £28,677 for full-time employees. This means the average tax for an employee is £5,640. So, on average the EU gets £45.12 a year from your taxes...

Tax! What can you do about it?

Yes, I know it is tax return silly season. Yes, I know I should be spending my valuable time filing tax returns. So, why have I decided to write this blog? Well, believe it or not, it has actually arisen from having looked at so many tax returns lately. It never ceases to amaze me that every year I will have clients ask me what they can do to reduce their tax bill. For last year. In January. Oh, how we laugh...

Of course, we all know that the tax year ends on the 5th of April. Your tax return and payment of tax has to be dealt with by the following 31st of January.

Therefore, if I'm helping you file your tax return in January we're already nine months beyond the end of the tax year. So, if you're thinking about making that big pension contribution, or buying that new van, it's a bit late for us to offset it against your tax for last year, unless of course your tax adviser also happens to be Gandalf the Grey.

As with all things, there are of course some clever things we can suggest, like Venture Capital Trust (VCT) or Enterprise Investments Scheme (EIS) investments. Well, we can suggest them, but you'll need an IFA to do them. So, again it's unlikely anything can be sorted out in the dying days of January.

So, the point I'm trying to make (through the fog of a tax return induced migraine), is that rather than wait for the orcs of Mordor, sorry I mean the inspectors of HM Revenue & Customs, to come knocking on your door on the 31st of January you might be better seeking the help of your local friendly tax adviser before they arrive. So, to avoid an invasion of the forces of darkness (HMRC), best have that chat before the 5th of April...

January Madness!

No, I'm not talking about the slow recovery from imbibing too much alcohol over Christmas and New Year, or even the sadomasochistic post-Christmas diet and exercise regimen, of course, I am talking about the final run-in to the 31 January! It's that time of year again for almost everyone working in tax (I'm sure even some VAT people get drafted in to help out at this time of year).

In order to try and make this month seem a little more bearable, I thought I'd share a little bit of festive humour, here are some of the reasons taxpayers have given to HMRC for filing their taxes late in recent years:

1. My pet goldfish died (self-employed builder)
2. I had a run-in with a cow (Midlands farmer)
3. After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else (London woman)
4. My wife won’t give me my mail (self-employed trader)
5. My husband told me the deadline was 31 March, and I believed him (Leicester hairdresser)
6. I’ve been far too busy touring the country with my one-man play (Coventry writer)
7. My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver)
8. I’ve been cruising around the world in my yacht and only picking up post when I’m on dry land (South East man)
9. Our business doesn’t really do anything (Kent financial services firm)
10. I’ve been too busy submitting my clients’ tax returns (London accountant)

Source: https://www.gov.uk/government/news/revenue-reveals-top-10-oddest-excuses-for-late-tax-returns

Whilst I know some of these are getting old now, they're still quite amusing.

However, the matter of late filing is still very serious for the taxpayer (as well as being a post-Christmas headache for us practitioners). Of course, I am talking about HMRC's penalty regime:

• £100 – applied immediately the return is late;
• £10 per day – charged once the return is 3 months late for a maximum of 90 days;
• the higher of £300 or 5% of the tax due – applied if the form is 6 months late;
• a further £300 or 5% of the tax due (whichever is higher) – applied if the form is 12 months late; and
• you’ll also be charged interest on late payments of tax.

If they are going to be late, it's always worth considering if they do have a reasonable excuse. A reasonable excuse is something that stopped you meeting a tax obligation that you took reasonable care to meet, for example:

• your partner or another close relative died shortly before the tax return or payment deadline
• you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
• you had a serious or life-threatening illness
• your computer or software failed just before or while you were preparing your online return
• service issues with HM Revenue and Customs (HMRC) online services
• a fire, flood or theft prevented you from completing your tax return
• postal delays that you couldn’t have predicted
• delays related to a disability you have

Source: https://www.gov.uk/tax-appeals/reasonable-excuses

Have a great 2019 folks!

Tax: A dirty word?

My career in tax has spanned almost 20 years now, and I recently had cause to reflect on how the profession has changed in the public eye. It really is rather alarming, and a lot of that change has been caused by two things in my opinion: greed and propaganda.

When I started out my career in 2000 I recall the awkward silence one experienced when being asked the question "and what do you do?". Any response almost always seemed to include statements along the lines of "but, I don't work for the Revenue" (not that there's anything wrong with that you understand), or "no, I'm one of the good guys, we save you tax", at which point everyone would usually start breathing again and ask a few interested questions.

Fast forward to 2018, and the mention that you "work in tax" tends to elicit that we are somehow responsible for all the tax schemes, avoidance, and evasion that has ever existed and very possibly we're the cause of the latest natural catastrophy! Oh well, at least we're not bankers...

So, you can see what I mean by the turnaround in public opinion in the last 20 years. Why has this happened though? Well, we really weren't helped by the sheer number of tax schemes that were put in place during this time by everyone from perfectly scrupulous advisers to some who had even less  actual knowledge of tax than their clients (yes, some parts of the tax world became like 1970's insurance salesmen).

However, despite the media shenanigans that has now largely changed. For those of us who are professionally qualified and subscribe to our professional body we are (as we always have been) bound by certain professional rules, ethics and guidelines. Those were beefed up in recent years to cover the topic of “tax avoidance” at the behest of the Treasury, and most of the tax and accounting bodies in the UK now adhere to something called PCRT (Professional Conduct in Relation to Taxation).

So, lets hope in the coming years that the media will catch up with reality and realise that tax isn’t the Wild West. Yes, there will always be unregulated providers out there, but that is the same with many things. You wouldn’t get an unregistered plumber to replace your boiler, so why would you get an unregulated tax adviser to do your tax planning? Just think on that...

Staying ahead...

My apologies in advance, normally this blog is about tax, but I've gotten a little philosophical lately and thought I should share my musings...

As some of you may know, I am a keen (but very amateur) clay pigeon shooter. Yes, I enjoy blowing up little disks of pulverized limestone in my free time. However, whilst sitting in the audience of a recent seminar I was put in mind of how like my favourite hobby both being in business and working in tax are like...

You see, the trick with shooting a little clay disk out of the sky involves a number of skills:

• being aware of your environment
• having a clear view of your target
• following it as it moves through the air
• pulling the trigger, and
• most importantly keeping moving in the direction of travel

Whilst it is not impossible in the discipline to take a fixed shot, or even to "ambush" a target, more often than not you'll miss as a result of such behaviour.

All of this made me really think about the way we approach our businesses, as in where is that "made it" moment, and do you, as an entrepreneur, stop or keep moving? The same can be applied to a career, or even one's financial and tax planning. If you stop moving, if you stop innovating, if you stop progressing and growing, you miss what you were aiming at.

Very few things in life stay still, least of all our goals and desires in life. Keep moving and blow your goals out of the sky!

So, what's your "Exit Strategy"?

As you'll have gathered from my blog back in the spring “Looking for the door?” an "Exit Strategy" is now less and less likely to mean physically selling off your business to a third party. I would argue it's possibly even less likely to mean a management buyout too. To explain why I'll bring you back to a question I've asked before:

"If I sold my business, would the money I got provide me with the same level of income as my business does?"

If it does, then great let's go sell your business and live the dream, that being, of course, a residual income in retirement without all the worry associated with running a business in later life. If however, the truth of the matter is that it won't (especially with ongoing all time low-interest rates) then we need to look at some alternatives.

There is, of course, the tried and tested method of loading your pensions with cash and/or commercial property, but in recent years we've seen the limits on pensions greatly diminished. Not saying it's a bad idea, but it's probably only part of the solution for most. Or one can try to build up a portfolio of assets (investments and property) outside of the business to replace the income your business generates. The problem is, if you're already thinking of exiting your business, it's probably too late to implement such conventional ideas.

Let me throw a Virtual Hand Grenade (or VHA) into the conversation for a moment: How about keeping your business?

We've already established that your business is your greatest income producing asset, so quite simply I ask why are you letting it go? Most businesses, if structured in the right way really don't need you (the business owner) to make them tick. I know this is a very different way of thinking about your business, and for many of us, it is akin to the children leaving home. After all, you've most likely started your business, nurtured it and watched it grow, and now I'm asking you to watch it leave home and head off into the big wide world without you...

BUT, if you have the right people, the right systems, the right structure, and drive all of that through the right incentives then stepping away (without giving it away) becomes easier to do, and you get to keep the income. Sounds like something worth talking about doesn't it? I've helped my clients, friends, and family all re-evaluate the way they've looked at this particular conundrum, and though it will often produce different answers for different people it does help widen their options significantly. If it could work for you, i.e. a business which generates a continued income without that business being dependent on you to drive it, isn't that a conversation worth having?

Things may go up as well as down...

I am of course talking about interest rates, following today's increase by the Bank of England from 0.25% to 0.50%. A minor change some will say, and I'm largely inclined to agree, but a good many will underestimate the impact of such a small percentage increase, which is, in fact, a 100% increase in the base rate. Sensationalistic, I hear you say? Yes, that was my intention...

There will be lots of noise made today and in the coming days about a change of direction by the Monetary Policy Committee no doubt. However, let us not lose sight of where interest rates are, how long they've been there and where they have come from (thanks to www.economicshelp.org and the ONS for the attached graphic).

We have experienced record low levels of interest for an equal record level of time during a period of a record level of central bank input. In effect, what we have seen over the last 10 years has been artificial. It's been an economy on life support!

So, in essence, we should see this as a positive move, yes? Well, that's a much more difficult question. Largely interest rates are increasing due to inflation outstripping wage growth. As with all things, economics requires that things have an equal and opposite reaction. This increase is in effect a measured step on a path to ensuring that consumer prices don't rocket as a result of a lower sterling. Now, I'm no economist, and better minds than mine will articulate this in a far more accurate manner, but in short, the interest rate rise would appear to be a result of the negative economic news.

The impact of all of this, of course, depends on which side of the fence you sit. Those with hefty mortgages will lose out, whilst those with savings will stand to see some modest benefits.

Of the 8.1 million households with a mortgage, 3.7 million, or 46%, are on either a standard variable rate or a tracker rate, so less than half will be immediately affected. Even then, according to UK Finance, the average outstanding balance is £89,000 which would see payments increase by between £11 and £12 a month. So the initial impacts are minimal on household budgets. What should be of more concern is that this will not be the only increase, and one would expect to see steady rises over the next 2 to 3 years.

It is also important to note that the Bank estimates that almost 2 million mortgage holders have never experienced a rate rise. All of this is, of course, risible if you can remember the double-digit interest rates from the 70' and 80's. However, it's impact should not be underestimated with ever spiraling house prices and mortgage levels.

As for savers, well, we'll have to sit tight and see what the high street banks offer in way of increases. As usual, I'd expect them to lag behind in terms of both amount and timing in relation to mortgage rates.

Looking for the door?

At Haines Watts I talk to a lot of business owners about their options when it comes to exiting their businesses. The traditional thinking has always been to reach a point where they no longer want to drive their business day-to-day and then to sell it to a third party, or possibly even entertain an MBO. They can then take the cash and sail off into the sunset...

However, more and more I find I'm helping to teach them to think about their business and their exit from it in a different way. Essentially this takes a simple change of mindset. Whatever their business or source of wealth is it is merely a tool to facilitate their lifestyle, it is an investment (albeit an investment of their blood, sweat, and tears). I get them to ask themselves this question:

"If I sold my business, would the money I got provide me with the same level of income as my business does?"

More often than not the answer is no, it won't. So, if we take a step back, and look at it in the same way that they would approach their normal business dealings what should they do? With some, the answer is staring them in the face, and they have taken most of the steps they need to already. For others, it's a case of helping them get the building blocks right to allow them to step away from their business. Of course, I am talking about keeping their business and making the transition from director-shareholder (and in some cases general dogsbody) to that of a retired director-shareholder. To put it simply, just because you no longer work in your business 5/6/7 days a week does not stop you from enjoying the profits it generates!

So, how do you do it? Well, I'll save that for another time...

2017: New Year's Resolutions...

It's been a little while since I've been regularly commenting in my blog, and my posts have been a bit hit and miss as to when they go up. All rather remiss of me I know, and that's why in the New Year it is one of my resolutions to become more active in writing about tax again with the aim of publishing at least one tax blog every month. Not the most thrilling resolution I'm sure, but 2017 is likely to be one of the most eventful years in taxation that we have seen in some time!


For starters, we have May and Hammond (our new Prime Minister and Chancellor of the Exchequer, if only Boris Johnson's surname was Clarkson it would be uncanny), the latter of whom will be delivering his first Budget speech on 8 March 2017 this year. Hopefully this will pass without the prerequisite tomfoolery of their namesakes on Amazon Prime!

The New Year will also bring with it ramifications for European and global markets as we see Brexit gain pace in the spring and the arrival of President Trump in the White House. I'm sure there will be no end of commentary over these particular events in early 2017, which will undoubtedly have differing effects on business generally. The former (Brexit) could see some major changes to the UK's tax legislation, but it remains to see what Donald Trump will do for trans-Atlantic tax harmony.

On another level we will also see further developments on MTD (Making Tax Digital, not Match of The Day) as we stride ever closer to digital integration with HMRC, and lets not forget of course the notification process for those with overseas assets and property.

Yes, 2017 should prove to be a most interesting year...

Brexit: The Aftermath

Last Thursday as a nation we voted and on Friday, depending on your personal inclination, we either celebrated or despaired as a nation divided. Yes, the vote was close, 52% vs 48%, and we saw record turnouts for the referendum, certainly higher than any I can remember in recent history for the UK electorate, which should be taken as a positive if it can be turned into greater participation in our national politics.

Anyway, as you should have guessed by now this is a blog about tax (with other musings occasionally I admit), so how has our decision to leave the EU affected tax? The short answer, as of yet is that it  hasn't, and Mr Osborne's speech this morning would seem to give us a reprieve until at least autumn time when we will have a new Prime Minister and leader of the Conservative party.

So, what can we expect?

The Chancellor was quoted pre-referendum as saying we would see £15bn of tax rises, comprising a 2p rise in the basic rate of income tax to 22%, a 3p rise in the higher rate to 43% plus a 5% rise in the inheritance tax rate to 45p. There would also be an increase in alcohol and petrol duties by 5%. He also mooted that there would be spending cuts worth £15bn, including a 2% reduction for health, defence and education, equivalent to £2.5bn, £1.2bn, £1.15bn a year respectively, along with larger cuts of 5% from policing, transport and local government budgets. Yet this morning he seemed more conciliatory, stating the strength of UK Ltd and our ability to weather the storm and emerge stronger. Was this simply scaremongering to maintain the status quo? Only time will tell...

What should be of more concern are the tax impacts of leaving the EU, rather than those likely to be imposed by our Chancellor.

As a result of Brexit the UK would no longer be part of EU’s Customs Union. This raises the prospect that the EU’s customs duties could apply to imports from the UK, making it less attractive for EU companies and consumers to source goods from UK companies. The UK of course could do the reverse, and as the UK is a net importer from the EU such a move is unlikely by either party.

After a Brexit, sales of goods to and from the UK may no longer be able to use the EU’s acquisition and dispatch system (accounted for on VAT returns). Instead they would become imports and exports which would need to clear customs and incur import charges.

These are but two of the potential impacts, but the consequences of departing from fiscal union with the EU may not be as apocalyptic as we have been led to believe, however, expect a bumpy ride on the train out of Brussels...

Brexit: A Perfect Storm?

Like most of you, I'm sure, I seem to be having a lot of conversations about Europe, the EU and Brexit, indeed I've just read a blog by our National Managing Partner on the subject. Being the political cynic that I am, I just can't help but wonder if we've collectively taken our eye off the ball as far as some of the wider economic issues are concerned, and the upcoming referendum seems to be doing little to improve the level of certainty in the UK, and wider economy.


Ignoring Brexit for a moment lets look at some of the economic indicators in the UK:

• We still have record low interest rates in the UK, combined with continued low inflation (0.3% in March);
• Today it has been announced that unemployment figures have risen over the last quarter to 1.7 million;
• Increases in earnings have begun to slow over the same period down to 1.8% from 2.1% in the previous quarter; and
• UK  property prices are around the same levels now as they were before the start of the global economic crisis (some commentators believe they have already begun to fall);

Of course, these are not all of the issues, just some of the headline ones and whilst none of this is catastrophic, it is clearly not a picture of health from an economic viewpoint. The vista is not much better if we look further afield than the UK either I'm afraid.

Our financial markets are performing much better, for now, but one wonders how long that can continue. I was listening to a leading investment manager over lunch yesterday, reflecting on how we are currently enjoying one of the longest bull markets in recent history, and that many analysts believe the markets are close to the top of that now with pessimism starting to creep in. An interesting fact I will share with you, of our FTSE 100 companies, 70-80% of their earnings come from outside the UK. So they are not a particularly good indicator of the wider UK economy anyway.

At this point I really must remove the cowl and put down the scythe, as I will be talking us into another recession, but I do think it is important to consider the impact of the upcoming referendum in light of our current economic climate. The one thing that economies and markets really do not like is uncertainty, and in the absence of any real plans being put forward by our politicians I am afraid that is what will result from a vote to leave, uncertainty...

#Budget2016

Well, that was certainly an interesting speech from our current Chancellor Mr Osborne. It very much read as more of the same and holding the current course. However there were some big bonuses for small businesses, as well as some unexpected nasties hiding in the details...

It will be interesting to see how the budget is received in the wider media, a lot of social media comment (a useful social barometer) has so far been on the negative side.


Here are some of the highlights:

• Corporation Tax Cut: it was 20% at the start of the parliament. By 2020 it will fall to 17%. "Britain is blazing a trail, let the rest of the world catch up," the Chancellor says.
• Business Rates Cut: a permanent increase to the threshold for business rates from £6,000 to £15,000 will benefit many small businesses. The higher rate will rise from £18,000 to £51,000. Over 600,000 small businesses will pay no business rates from next year.
• Insurance Premium Tax: only rising by 0.5% rather than the 3.0% that was mooted earlier in the day.
• Capital Gains Tax: current rates will be cut from 28% and 18% to 20% and 10% respectively, although it looks like the old rates may still apply to gains on property (so no bonus for beleaguered property investors). Entrepreneurs relief has also been left alone (for now), although relief on associated disposals has been extended.
• Income Tax: the personal allowance will rise to £11,500 and the higher rate band goes up to £45,000 too.
• National Insurance: Class 2 contributions are to be abolished.

There were however some not so welcome low points of the speech:

• Tax Avoidance Crackdown: The Chancellor announces a series of actions to tackle tax avoidance and evasion totaling £12bn, including moves to end the use of "personal service companies" by public sector employees to minimise their tax liabilities.
• Loans to Participators: the tax charged on loans to directors and shareholders of businesses will see the punitive tax charged from 25% to 32.5%.

Full details of the budget proposals can be found here:

https://www.gov.uk/government/collections/budget-2016-tax-related-documents 

Osborne Attack on Property Investors

Announced in yesterday's Autumn Statement, the chancellor continues his attack on property investors. Not only will tax relief on interest payments now be greatly curtailed, but from 1 April 2016 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.

The higher rates will be 3 percentage points above the current SDLT rates. These higher rates will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property given the role of this investment in supporting the government’s housing agenda.

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. This would seem to imply that smaller corporates, such as family investment companies may be affected by the proposed changes.

Also, from April 2019, a payment on account of any CGT due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal. This will not affect gains on properties which are not liable for CGT due to Private Residence Relief. The government will publish draft legislation for consultation in 2016.

One has to ask if this is genuine tax policy, or merely using tax as the tool with which to discourage small individual property investors in order to open up the property market for first time buyers. If that is the case, then Mr Osborne has far more to do as the current crisis is far more complex than simple supply and demand...