A very happy and prosperous new year to our readers from MORRIS COOK CHARTERED ACCOUNTANTS. It includes: the draconian increase in Stamp Duty for buyers of second homes or buy-to-let property; a summary of other changes announced for next year and beyond; and a note of changes to car fuel advisory rate changes 1 December 2015.

Car fuel advisory rates changes

From 1 December 2015, the advisory fuel rates have changed to:

1400cc or less: petrol 11p per mile, LPG 7p per mile
1401-2000cc: petrol 13p per mile, LPG 9p per mile
Over 2000cc: petrol 20p per mile, LPG 13p per mile

Diesel rates:

1600cc or less: 9p per mile
1601-2000cc: 11p per mile
Over 2000cc: 13p per mile

These rates can be used from 1 December 2015 to calculate the petrol content of mileage rates paid to employees, or as a basis to repay private petrol provided by employers for the use of a company car.

Stamp Duty increase for second home buyers

George Osborne and his team seem to have a grudge against landlords and second home owners. From 1 April 2016, Stamp Duty Land Tax (SDLT) payable on the acquisition of residential property – where the property is a second home or a buy-to-let investment - will see a significant increase in the amount of SDLT payable.

At present, this will only apply to properties purchased in England and Wales. In Scotland, the new Land and Buildings Transaction Tax applies.

For example:

Andy Jones is considering a further acquisition for his Midlands based buy-to-let property business of £300,000. What are the SDLT implications of buying before or after 1 April 2016?

Completion date 1 March 2016 – SDLT payable would be £5,000.
Completion date 1 May 2016 – SDLT payable would be £14,000.

The virtual tripling in SDLT due is a result of the 3% increase in SDLT rates from 1 April 2016. For acquisitions after 1 April 2016 the new rates are:

£0 to £40,000 no SDLT is payable
£40,000 to £125,000 – 3% on total cost of acquisition
£125,001 to £250,000 – 5% on this band only
£250,001 to £925,000 – 8% on this band only
£925,001 to £1.5m – 13% on this band only
Over £1.5m – 15% of the property price above this amount

Will this fuel a rush to buy before rates increase on 1 April 2016? Prospective buyers may want to consider this option, but don’t buy in haste and repent at leisure!

A HOST OF NEW INITIATIVES IN THE OFFING

The government has also published its intention to change a number of other tax reporting issues. Some of the more impactful for smaller businesses and Self Assessment tax payers are reproduced below:

• Simple Assessment – legislation will be introduced in Finance Bill 2016 to provide a new power to allow HMRC to make an assessment of a person's Income Tax or Capital Gains Tax liability without them first being required to complete a Self Assessment return where it has sufficient information about that individual to make the assessment. This measure will have effect on and after the date of Royal Assent to Finance Bill 2016.
• PAYE - ‘On or Before’ Reporting Obligation Review – HMRC have carried out a review of the ‘On or Before’ reporting obligations for employers who use the Real Time information payroll filing process. Currently, existing micro employers (with 9 or fewer employees) using Real-Time PAYE may take advantage of a reporting relaxation 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 is a 2 year temporary relaxation which is legislated to come to an end on 5 April 2016: this measure confirms the temporary relaxation will end, as planned, aligning the treatment of existing micro employers with all other employers.
• Capital Gains Tax: payment on account – from April 2019 a payment on account of any Capital Gains Tax (CGT) due on the disposal of residential property will be required to be made within 30 days of completion of the disposal. Taxpayers will be able to reconcile their payment on account with their total CGT liability for the year, after the year end. Legislation will be introduced in Finance Bill 2017 and the government will publish draft legislation for consultation in 2016.
• Student loan repayments – As announced at Autumn Statement: From April 2016 the income threshold for loans taken out on or after 1 September 2012 is frozen at £21,000 until 5 April 2021, and from April 2019 employers will be asked to start deducting repayments from borrowers of postgraduate loans, at a rate of 6% alongside undergraduate repayments at the existing rate of 9%
• Data-gathering from Electronic Payment Providers and Business Intermediaries – Legislation will be introduced in Finance Bill 2016 to identify businesses who are not complying with their tax obligations by extending HMRC’s current data gathering powers. The extended powers will include business intermediaries who facilitate transactions, particularly online and electronic payment service providers who operate digital wallets, thereby future-proofing legislation to include emerging new data sources.
• Stamp Duty Land Tax: changes to the filing and payment process – As announced at Autumn Statement, 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 to 2018.

FOR MORE INFO on any of these issues, contact Morris Cook Chartered Accountants.