The message from the Chancellor, George Osborne, as he delivered his last Autumn Statement of the current parliament was ‘we are all in this together’. Really? I’ll let you judge, writes Trevor Wilkes, senior private client tax advisor at The Fry Group.
Personal Allowance
Before the Autumn Statement much was made of the government’s proposal to abolish the availability of the personal allowance for non UK residents. Currently all UK and EU citizens qualify for the personal allowance; an amount of UK income which is tax free. Whilst this is still on the agenda, the announcement today assured no change to non-residents entitlement to personal allowance until at least April 2017.
From April 2016 the personal allowance will rise to £10,600. For the first time in five years those paying tax at the higher rate of 40% will also fully benefit from the increase with the 40% rate kicking in at £42,385.
Stamp Duty Land Tax (SDLT)
Significant changes were made to the rates and bands of SDLT payable when buying UK residential property. With effect from 4 December 2014, you will only pay stamp duty on the part of the property price within each tax band at the rates applicable, all of which are detailed in the graphic below.
The increase payable on the purchase of properties valued above £1,500,000 could almost be called a large house or mansion tax, but wasn’t that proposed by the opposition?
Trusts
A huge U-turn was very quietly mentioned in the documentation that followed the Autumn Statement. The controversial introduction of a Settlement Nil Rate Band (SNRB) was dropped. Instead the government will introduce new rules to target avoidance through the use of multiple trusts.
Resident Non Domicillaries
For non UK domiciled individuals who become UK tax resident there is a choice as to what income they are taxed on. The arising basis will mean that you will be taxed on your worldwide income. The alternative is to be taxed on the remittance basis, ie, just taxable on the income and gains brought into the UK.
The government will also consult on making the election apply for a minimum of three years.
The Annual Tax on Enveloped Dwellings (ATED)
Those non-natural persons owning UK residential property are liable to an annual tax charge. The annual charges on the ATED will increase by 50% above inflation for residential properties worth more than £2,000,000 for the chargeable period 1 April 2015 to 31 March 2016.
There will also be a review of the reporting requirements for such structures.
Finance Bill 2015
Next week sees the publication of the draft Finance Bill 2015. This will contain draft legislation on many proposed changes including implanting a Capital Gains Tax charge on non-residents for gains from the disposal of residential property. We will publish further detail on this next week.
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