Steven Holden Tax takes one small STEP...

Apologies for the pun, those of you who read this blog regularly ought to be used to them by now...

Earlier this year (May 2020) I became a member of the Society of Trust and Estate Practitioners, or STEP as it's more commonly known these days. You'll have seen from my profile that I'd advised in the trust and estate arena for many years, so it was nice for me to add this qualification to my resume, and hopefully, it provides some further assurance for my existing and prospective clients.

So, what is STEP and what do they do? Well, I'll borrow a couple of quotes from their website:

"STEP is the global professional association for practitioners who specialise in family inheritance and succession planning. We work to improve public understanding of the issues families face in this area and promote education and high professional standards among our members."

"STEP members help families plan for their futures, from drafting a will to advising on issues concerning international families, protection of the vulnerable, family businesses, and philanthropic giving. Full STEP members, known as TEPs, are internationally recognised as experts in their field, with proven qualifications and experience."

So, you can see why what they do fits so well with what I do. Find out more about them here.

Lockdown got your finances down? How can tax help...

So, if 2020 and the current UK #coronavirus lockdown has given some of us anything (useful I mean), it's time. As your friendly online tax practitioner, I thought I'd share some handy tips of what you could be looking at if you have some downtime on your hands.

1. GET YOUR TAX RETURN SORTED OUT!

Whether that means doing it yourself through your HMRC personal tax account, or working with your tax practitioner to get it filed early, now is a good time to do it, and not just because it gets it out of the way. For those with payments on account to make in July (although we all know you have the ability to defer those payments until January) it could result in a reduction in that payment. Similarly, if you work in the construction industry as a self-employed contractor you're probably owed a tax rebate from your CIS deductions. Working with some clients during lockdown I've seen 4 figure sum rebates, which have been really handy.

2. SEE IF YOU CAN MAKE A MARRIAGE ALLOWANCE CLAIM

If you're married or in a civil partnership, can you answer yes to both of these questions:

• Are you a basic rate taxpayer?
• Does your spouse earn less than £12,500 a year? 

If you can, then congratulations your spouse/civil partner might be able to transfer £1,250 of their personal allowance to you resulting in a tax rebate of up to £250 every tax year (6 April to 5 April the next year). You can backdate your claim to include any tax year since 5 April 2016 that you were eligible for Marriage Allowance. This is possible whether you're an employee or self-employed, check out THIS LINK to see if you can claim.

3. SELF EMPLOYED? HAVE YOU CLAIMED SEISS?

If you were self-employed in the 2019/20 tax year, have submitted your self-assessment tax return for the 2018/19 tax year, had your self-employment affected by coronavirus, and had profits under £50,000 for the last three years then you should be eligible and HMRC should have written to you.

If they have, and you haven't got around to applying, DO IT NOW! There's a mistaken belief amongst many in the self-employed community that they can only claim if they haven't been working at all. That is simply not true, it is only necessary that the coronavirus outbreak has had a detrimental effect on your business. But remember, any payment you receive under SEISS is taxable in 2020/21, so make sure you keep some aside to cover the tax if you can. You can also check out another of my blogs about HMRC's new powers should anyone make a fraudulent claim.

Loan Charge - Where are we?

A lot of what I will post here is direct from HMRC's recently published guidance last week (it's here if you really want to read all of it)on the upcoming changes to the loan charge following the review by Sir Amyas Morse late last year. The review was published on 20 December 2019 along with the government’s response to it. The government announced that it would accept all but one of the review’s recommendations. The measures announced will include the following changes to the loan charge:

• it will only apply to outstanding balances of disguised remuneration loans made between 9 December 2010 and 5 April 2019 inclusive;
• it will not apply to loans made in tax years before 2016 to 2017 where a reasonable disclosure of the use of a disguised remuneration tax avoidance scheme was made within the relevant tax return or, where appropriate, associated documents, and HMRC failed to take any action (for example by opening an enquiry);
• those affected by the loan charge will be able to elect to split their loan balance over 3 consecutive years - 2018 to 2019, 2019 to 2020 and 2020 to 2021;
• late payment interest will not be payable for the period 1 February 2020 to 30 September 2020 on any Self Assessment liability as long as a return is filed and the tax paid, or an arrangement made with HMRC to do so, by 30 September 2020;
• moving the date by which the additional information form must be returned to HMRC from 1 October 2019 to 1 October 2020 - the form requires customers to provide full information to HMRC relating to any outstanding disguised remuneration loans which they will need to make tax payments for.

It is important to note that these measures will have effect retrospectively to 5 April 2019, which is the relevant date for the purposes of applying the loan charge.

If you have any questions about these changes please contact HMRC's loan charge review team by email:  loanchargeconsultationresponses@hmrc.gov.uk.

Income Tax - How it works (a users guide)

In the run-up to the upcoming UK general election, I have had quite a few interactions on social media with people discussing the various tax policies of the main parties. It has been quite clear to me, and on more than one occasion directly pointed out to me, that most people really don't understand how our current Income Tax system works, let alone the proposals in the manifestos. So, as ever I'm here to help (and also to hopefully help as many people as possible without having a million-and-one Twitter conversations to achieve it!).

Income Tax

• At the moment you all get a £12,500 personal allowance before you pay any Income Tax;
• After that, the next £37,500 is taxed at 20%. So, your maximum Income Tax bill is £7,500 if you earn £50,000 a year (we'll come on to National Insurance later);
• Above £50,000 (that's your £12,500 personal allowance and £37,500 20% band), you'll pay Income Tax at 40% (but only on everything above that figure);
• If you're fortunate (or unfortunate in tax terms) to earn above £100,000 a year, then you lose your personal allowance by £1 for every £2 you earn above £100,000. This creates an effective 60% Income Tax rate between £100,00 and £125,000;
• Between £125,000 and £150,000 you're back to paying just 40% Income Tax on that slice of income; and finally
• Above £150,000 you will pay 45% Income Tax.

Footnote: there are different rates of tax for dividends (7.5%, 32.5%, and 38.1%), and there are other Income Tax reliefs.

So, as you can see our current Income Tax system is about as clear as mud, and that's before we've even got on to National Insurance...

National Insurance

Unfortunately, despite many promises, the National Insurance (NI) system has never quite been aligned to Income Tax. However, it is somewhat simpler than Income Tax:

• On your first £8,632 you pay no NI;
• Between £8,632.52 and £50,024 you pay NI at 12%; and
• Over £50,025 you pay NI at 2%

Footnote: there are different rates for the self-employed, and if you take your remuneration from your business as a dividend there is no NI on that.

So, assuming you're an employee (things are a little for the self-employed/company owner) that's how tax works. Unfortunately, there seem to be a lot of people out there who think when you breach a certain tax band you pay that rate on all your income, not so my friends...

Finally, Labour's 45% above £80,000. How much difference will it make? Well, for every £1,000 over the threshold you earn you'll pay an extra £50 a year, or 96p a week. Doesn't even buy a cup of coffee does it? If you're lucky enough to earn £100,000, then it'll cost you £1,000 a year, or £19.23 a week (about the cost of a McDonalds for a family of four). Not as horrendous as it sounds when you think about it...

Who can you Trust?

You want to give someone a gift, let's say its for their birthday. After considering what to get them you grab your electronic device of choice, mine would be my iPhone (other mobile devices are available), and log in to your favourite online retailer "wesellstuff.com". After making your selection you pop in the recipient's address and pay for your gift. Usually, within 24 hours it's delivered to the intended recipient and you get a little notification to say it has arrived.

A normal commonplace transaction and series of events yes? Now, I hope you'll bear with me as I haven't taken leave of my senses (yes I know this is a "tax" blog), but there is a reason for my little story above, and it relates to the use of trusts...

You have trusted "wesellstuff.com" to take your money and send your purchase to the chosen recipient. However, because they're on holiday it got delivered to the neighbour, who then forgot about it. Or, the delivery driver left it behind the bushes by the front door and a passerby decided to help themselves to it. What I'm trying to illustrate is that your intended gift could have ended up in the wrong hands, or have disappeared altogether.

So, let me get back onto the subject of tax planning and the use of trusts. My little story hopefully illustrates why people use trusts. When we're helping clients with inheritance tax planning we're not talking about a £10 book or DVD, we are talking about gifts of tens sometimes hundreds of thousands of pounds. Imagine that ended up in the wrong hands or being lost because of circumstances outside of your control!

Now some will say that I am being sensationalist, but I really am not:

• Let's say you gift £50,000 to your daughter for her and her boyfriend to buy their first house. Like most people, they choose the cheapest option for their legal work and they end up buying it as joint tenants. Tragically your daughter passes away, and because she bought the property with her boyfriend as joint tenants he inherits her half share, which by the way includes your £50,000 gift. 
• Alternatively, you make a gift of £50,000 to your son to help him set up his own business. After a couple of years, it turns out not to be the roaring success that he hoped it would and he files for bankruptcy. Again, your £50,000 is gone and there's nothing you can do to get it back.
• Finally, as in my first example, you gift £50,000 to your child (who is married), and within a couple of years they divorce and their ex-spouse takes half of the gift you made as part of the legal settlement.

All of these are very real examples that I have come across in practice that leave the donor (i.e. YOU) with absolutely no control or recourse regarding the gift they made to help their child. I could tell many more involving people going off the rails, developing drink and/or drug problems, suffering from life-changing illnesses. In every single one of these instances, the position could have been very different if the parent in question had made the gift to their child by using a trust because a trust creates a sort of legal limbo between the person making the gift and the one receiving it. The effect of this is to create a situation where your intended beneficiary can have the use and enjoyment of the trust assets, but they do not legally own them in their personal capacity.

I really do wish that our current lawmakers and media would understand why trusts are used. These days they have almost become a byword for tax avoidance and corruption. Anyone with a trust is viewed suspiciously by the collective. Why is this I ask myself, and I can only conclude because it furthers a political narrative. The vast majority of people use trusts to PROTECT not to AVOID!

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...

Don't delay, file your tax return today!

Great to see some tax-related news from the BBC that's reasonably accurate today. Yes, I'm talking about tax return filing behaviour in the UK. If you want to take a look at their article it can be found here https://bbc.in/2M3QOIq courtesy of BBC News.

What's interesting though is that HMRC published this information on 1 February 2018 (https://bit.ly/2Fz7pzs courtesy of HMRC), although I suppose I should still applaud the BBC for bringing the plight of all of us humble tax practitioners to light.

Perhaps, at last, our clients will understand why we look like zombies at the end of January (and maybe they'll get their tax papers to us a bit sooner)!

For those who don't want to click through all the links and try to extract the facts, I'll set them out here:

• 11,433,349 Self Assessment returns were due for 2016/17
• 10,687,761 returns were received by midnight on 31 January 2018 (93.5% of total issued)
• Around 745,588 Self Assessment returns were still outstanding on 1 February 2018
• 9,916,430 returns were filed online (92.8%)
• 771,331 returns were filed on paper (7.22%)
• more than 4,852,744 returns were received online in January 2018 (44.8% of the total received)
• 1,290,948 returns were received on 30 and 31 January 2018 (26.6 % of total returns received in January)
• busiest hour: 4pm to 5pm on 31 January 2018 – 60,596 returns received (1,010 per minute; 17 per second)
• 389,849 payments transactions were handled on 31 January 2018

The really surprising thing is, go and apply these stats to your owns clients, you'll find those percentages are not far out. At the time of writing this, we're still waiting for about 25% of our clients to send us their tax information...

Have a productive January 2019 folks!

Death and Taxes: Why all the confusion?

A recent survey by Canada Life found that most people affected by inheritance tax (IHT) weren't aware of the nil-rate threshold after which the tax becomes due. The insurer found that among adults over the age of 45 with assets in excess of £325,000, 70% did not know the threshold for the standard nil rate band (£325,000), up from 61% in their 2016 survey.


There were some other interesting findings that fell out of the survey:

• 55% of respondents did not know the rate of IHT (40%) on death;
• 38% did not think their main home was liable for inheritance tax;
• only 32% know the annual exemption amount they are entitled to (£3,000); and
• only 40% of those surveyed were aware that vehicles, life insurance policies not held under trust, agricultural land, business assets and non-exempt gifts in the last seven years can be liable for IHT as part of an estate on death.

Having looked at the survey, I personally find the lack of knowledge it reveals is very worrying. It means that there are a lot of people out there who will not be taking advantage of the available reliefs, or worse blindly entering into a transaction that actually worsens their tax position!

H M Revenue & Customs latest figures show receipts from IHT have hit a record high, payments totaling £4.84bn in the 2016/17 tax year. For reference in 2009/10 IHT receipts were a mere £2.4bn. Whilst some of that growth has clearly been driven by house prices since the 2007/08 crash, particularly in the South East, one can't help but wonder if in part it is due to the lack of knowledge highlighted by Canada Life's research. (Personally, I also think the witchhunt on "tax avoidance" has made a lot of people nervous about doing any kind of tax planning whatsoever)

It is, however, worth pointing out that last month the government announced plans to review the ‘complex’ IHT system in the UK, tasking the Office of Tax Simplification (OTS) to make recommendations about possible reforms. Although, having been a tax adviser for as long as I have I remain skeptical about the OTS actually making any headway with simplifying the IHT code...

Trusts? HMRC wants you...

Today I've been trying to use HMRC's new Trust Registration Service. In and of itself the process is laudable, and one hopes that it will bring great transparency to the UK where tax and trusts are concerned. Hopefully, it will also dispel the "Daily Mail" myth (other news publications are available) that trusts are only used by those seeking to avoid tax.

So, what did I think in practice when working through the new system:

1. For new trusts, it's pretty straightforward. However, we now require far more data for beneficiaries, including their dates of birth and NI numbers. So, there is a little bit of annoyance factor in having to go back to the clients and ask for details we've not been used to asking for before.
2. Existing trusts, however, are a nightmare, especially where the original inter vivos settlor has since passed away. Have you tried getting an NI number or a passport reference for someone who died several years ago? Families and advisers just haven't retained that data as it wasn't needed back then when the trusts were set up. There are also other questions being asked that the current trustees and/or advisers will simply not know the answers to if the trust is long established.

As I have said, HMRC launching the TRS is a laudable aim (which I believe has the best of intentions, although I do worry about how HMRC will use the data they collect). However, in practice, the information being asked for about existing trusts is in some cases simply not available. This prevents further progress with the registration of that trust, there is simply no option to bypass the requirement and file a part complete registration.

This will cause huge problems for agents and trustees trying to get this done by 31 January 2018, a problem that has been massively compounded by HMRC releasing the agent access months behind schedule but not extending the deadline for registration.

HMRC

I think we need a rethink on the deadline for this!

Share the wealth (but keep it in the family)

For many years the typical way for a higher rate tax payer to cut the amount of tax they pay on their personal income has been to transfer shares in their company to their spouse who, for example, may be a non or lower rate tax payer. With many owner managed businesses remunerating the owners through a combination of low salary and dividends this has historically meant paying little to no tax on around the first £80,000 (approx.) for a married couple (or civil partners). This has of course become more important following the changes to the dividend tax regime from 6th April 2016.

It should come as no surprise therefore to learn that HM Revenue & Customs have consistently tried to deter and stop this "income shifting" over the years.  Many of you will no doubt be familiar with the machinations of the Arctic Systems case. However, so far, not much has changed and no new laws have been introduced to tackle income shifting. So if you are considering transferring shares to your spouse as a way to mitigate your personal tax exposure, you may conclude and decide to go ahead with this plan.

BUT WAIT! Read on and explore an even smarter way for you and your spouse (or civil partner) to minimise your joint tax bill.

Selling company shares?

Rather than transferring the shares, your spouse (or civil partner) could in fact buy those same shares from you. How would you fund this, I hear you ask? Well, you could refinance the mortgage on your home and your partner would use the resulting loan to buy shares from you. When you receive the money from your partner, you can use this to repay some of the original mortgage.

So far so good right? Well, there's more, the interest that you would have paid on the original mortgage would not have been eligible for tax relief, whereas the interest on the new loan (which your spouse used for the purchase of shares from you) is eligible for relief against tax.

All of which makes the process of buying shares more tax efficient – you can align income between you and your partner to help mitigate your joint tax bill, and you can claim tax relief on your interest payments! You would even be exempt from paying capital gains tax from selling the shares because the sale took place between you and your spouse (or civil partner).

Of course, nothing is easy and for this to work successfully, there are conditions that you would need to meet and hoops you would need to jump through. Of course, I would say that, I'm a tax adviser aren't I? In all seriousness though, as with most things we can do a DIY job, but would you (like Leonid Rogozov) remove your own appendix? 

Share the wealth (but keep it in the family)

For many years the typical way for a higher rate tax payer to cut the amount of tax they pay on their personal income has been to transfer shares in their company to their spouse who, for example, may be a non or lower rate tax payer. With many owner managed businesses remunerating the owners through a combination of low salary and dividends this has historically meant paying little to no tax on around the first £80,000 (approx.) for a married couple (or civil partners). This has of course become more important following the changes to the dividend tax regime from 6th April 2016.

It should come as no surprise therefore to learn that HM Revenue & Customs have consistently tried to deter and stop this "income shifting" over the years.  Many of you will no doubt be familiar with the machinations of the Arctic Systems case. However, so far, not much has changed and no new laws have been introduced to tackle income shifting. So if you are considering transferring shares to your spouse as a way to mitigate your personal tax exposure, you may conclude and decide to go ahead with this plan.

BUT WAIT! Read on and explore an even smarter way for you and your spouse (or civil partner) to minimise your joint tax bill.

Selling company shares?

Rather than transferring the shares, your spouse (or civil partner) could in fact buy those same shares from you. How would you fund this, I hear you ask? Well, you could refinance the mortgage on your home and your partner would use the resulting loan to buy shares from you. When you receive the money from your partner, you can use this to repay some of the original mortgage.

So far so good right? Well, there's more, the interest that you would have paid on the original mortgage would not have been eligible for tax relief, whereas the interest on the new loan (which your spouse used for the purchase of shares from you) is eligible for relief against tax.

All of which makes the process of buying shares more tax efficient – you can align income between you and your partner to help mitigate your joint tax bill, and you can claim tax relief on your interest payments! You would even be exempt from paying capital gains tax from selling the shares because the sale took place between you and your spouse (or civil partner).

Of course, nothing is easy and for this to work successfully, there are conditions that you would need to meet and hoops you would need to jump through. Of course, I would say that, I'm a tax adviser aren't I? In all seriousness though, as with most things we can do a DIY job, but would you (like Leonid Rogozov) remove your own appendix? 

Dividend Tax: HMRC's smash and grab...

As I'm sure you're aware the much heralded dividend tax comes into force with effect from 6 April 2016.  It will apply to all dividends received in excess of £5,000 per tax year (regardless of whether from listed investments or your own company). All of this means that an average company director taking a modest salary within his personal allowance, and the rest of his income from the company as dividends, will pay more tax in 2016/17 than he did in 2015/16.

This additional tax would be payable, under self-assessment by 31 January 2018, as the balancing payment for that tax year. However, it would seem that HMRC does not want to wait for the extra tax in the Treasury's coffers, and it's solution to improve the nation's cashflow has been to amend the tax codes of many company owner/directors to effectively collect "at source" an estimated amount based on the previous year's returned figures.

The deduction in a client's PAYE code is to be labelled as ‘dividend tax’, and the notes on the P2 (PAYE coding notice) will say: "this is to collect the basic rate of tax due on your dividend income".

The net result of this is that a lot of company owner/directors will suddenly start to see tax being deducted from their salaries (which are typically below the tax free personal allowance). Unfortunately, this is just another underhand smash  and grab by HMRC and the Treasury on the pocket of private business!

You can contact HMRC by telephoning them on 0300 200 3300 or complete an online coding notice query here. Alternatively, although not as quick as the two previous methods, you can write to HMRC at:

Pay As You Earn and Self Assessment

HM Revenue and Customs

BX9 1AS

Claiming Marriage Allowance

Source: HM Revenue & Customs

Marriage Allowance opened to the public in September this year, allowing eligible couples to save up to £212 in the tax they pay each year. An application can be submitted within your Self Assessment tax return or made online.

Marriage Allowance lets you transfer £1,060 of your Personal Allowance to your husband, wife or civil partner. Your Personal Allowance is the income you don’t have to pay tax on - for most people it’s £10,600. Adding £1,060 to your partner’s Personal Allowance means they’ll pay £212 less tax in the tax year (6 April to 5 April the next year). You can get Marriage Allowance if both:

• your partner’s income is between £10,601 and £42,385
• you and your partner were born on or after 6 April 1935

By claiming Marriage Allowance:

• your partner’s Personal Allowance increases to £11,660 - they’ll pay £212 less tax
• your Personal Allowance goes down to £9,540 - you won’t pay any tax if your income’s less than this

You can apply for Marriage Allowance online. If your application is successful, changes to your Personal Allowances will be backdated to the start of the tax year (6 April).

If your circumstances change, then you may need to cancel your Marriage Allowance, for example if your partner dies, or you get divorced. More details of this can be found here

.

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...