Other measures
Tax credits
The changes to tax credits proposed in the July 2015 Budget have been withdrawn. The rate at which a claimant's award is reduced as each pound of their income exceeds the income threshold (known as the taper rate) will remain at 41% of gross income. The level of income at which a claimant's tax credit award begins to be tapered away (known as the income threshold), will also stay unchanged at £6,420 a year.
As announced in the Summer Budget 2015, the income rise disregard in tax credits will reduce from £5,000 to £2,500 from April 2016. This is the amount by which a claimant's income can increase in-year compared with their previous year's income before their award is adjusted.
Stamp duty land tax on buy to let and second homes
Higher rates of stamp duty land tax (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 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. There will be consultation on the policy detail, which will include whether it is appropriate to have exemptions for corporates and funds owning more than 15 residential properties.
SDLT – changes to the filing and payment process
There will be a consultation 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.
Annual tax on enveloped dwellings (ATED) and SDLT
The reliefs available from ATED and the 15% higher rate of SDLT will be extended to equity release schemes (home reversion plans), property development activities and properties occupied by employees from 1 April 2016.
Non-UK residents with UK residential property
The capital gains tax (CGT) computations required by non-residents on the disposal of UK residential property will be changed. With retrospective effect from 6 April 2015, a double charge that may occur will be removed and an omission will be corrected with effect from 25 November 2015. HMRC will be given powers to prescribe circumstances when non-residents are not required to make a CGT return and CGT will be added to the list of taxes that the government may collect on a provisional basis.
CGT payment on account on residential property
From April 2019, a payment on account of any CGT due on the disposal of residential property will be required within 30 days of the completion of the disposal. This will not affect gains on properties that are not liable for CGT because of private main residence relief. Draft legislation will be published in 2016.
Making tax digital
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 should reduce errors through record keeping.
HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology. This will not apply to individuals in employment or pensioners, unless they have secondary incomes of more than £10,000 a year. The government will publish its plans to transform the tax system shortly and will consult on the details in 2016.
Review of employment status
The government has responded to the final report of the Office of Tax Simplification (OTS) review of employment status and is taking forward the majority of its recommendations.
Simple assessment of tax
The government will publish draft legislation for a new, simpler process for paying tax. This will be used for taxpayers in self-assessment who have simple tax affairs where HMRC already holds the data it needs to calculate the tax liability, and where existing payment processes are not available. Taxpayers will be sent a calculation that 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.
'On or before' reporting obligation review
On 6 April 2016, the two-year temporary relaxation for micro employers using real-time PAYE reporting will come to an end. This currently allows existing micro-employers using real-time PAYE to report all payments they make in a tax month on or before the last payday in the tax month rather than on or before each and every payday. This will align the treatment for existing micro-employers with all other employers.