Other areas of interest
Welfare reforms The welfare system will be reformed to make it fairer for taxpayers who pay for it, while continuing to support the most vulnerable. Changes include: working-age benefits, including tax credits and Local Housing Allowance, will be frozen for 4 years from 2016-17 (this doesn’t include Maternity Allowance, statutory maternity pay, paternity pay and sick pay) the household benefit cap will be reduced to £20,000 (£23,000 in London) support through Child Tax Credit will be limited to 2 children for children born from April 2017 those aged 18 to 21 who are on Universal Credit will have to apply for an apprenticeship or traineeship, gain work-based skills, or go on a work placement 6 months after the start of their claim rents for social housing will be reduced by 1% a year for 4 years, and tenants on higher incomes (over £40,000 in London and over £30,000 outside London) will be required to pay market rate, or near market rate, rents. Tax avoidance, evasion and aggressive tax planning The government will continue to clamp down on tax avoidance, aggressive planning and evasion, as well as increasing resources for HM Revenue and Customs (HMRC) so it can make sure people pay the tax that is due. This includes: extra investment between now and 2020 for HMRC’s work on evasion and non-compliance tripling the number of criminal investigations HMRC can undertake into complex tax crime, concentrating on wealthy individuals and companies allowing HMRC to access more data to identify businesses that are not declaring or paying tax clamping down on the organised crime gangs behind the illicit trade in tobacco and alcohol stopping investment fund managers from using tax loopholes to avoid paying the correct amount of Capital Gains Tax on their profits from the fund (this is known as carried interest) making sure international companies pay tax on profits diverted from the UK introducing a ‘general anti-abuse rule’ penalty and tough new measures for serial avoiders, including publishing the names of people who repeatedly use failed tax avoidance schemes. Reforming dividend tax The dividend tax credit (which reduces the amount of tax paid on income from shares) will be replaced by a new £5,000 tax-free dividend allowance for all taxpayers from April 2016. Tax rates on dividend income will be increased. This simpler system will mean that only those with significant dividend income will pay more tax. Investors with modest income from shares will see either a tax cut or no change in the amount of tax they owe. Inheritance Tax Currently, Inheritance Tax is charged at 40% on estates over the tax-free allowance of £325,000 per person. Married couples and civil partners can pass any unused allowance on to one another. From April 2017, each individual will be offered a family home allowance so they can pass their home on to their children or grandchildren tax-free after their death. This will be phased in from 2017-18. The family home allowance will be added to the existing £325,000 Inheritance Tax threshold, meaning the total tax-free allowance for a surviving spouse or civil partner will be up to £1 million in 2020-21. The allowance will be gradually withdrawn for estates worth more than £2 million. Annual investment allowance The annual investment allowance, which has previously been increased temporarily, will be set permanently at £200,000 from January 2016. The allowance means businesses can deduct the full value of certain items, including equipment and machinery, up to a total value of £200,000 from their profits before tax. This helps them with cash flow because it means the full tax relief is given in the year items are purchased, rather than over several years.
Spending Review and Autumn Statement 2015
CIPP summary of the Spending Review and Autumn Statement 2015 26 November 2015
CIPP Policy News Journal
25/04/2016, Page 169 of 453
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