A raft of changes are under review, including:
- Increase in IHT threshold to benefit middle England
- Introduction of a mansion tax which would hit the asset rich, cash poor
- Simplification of employment taxes to benefit SMEs
- Restriction of the personal allowance for non-residents
Increase in the IHT threshold to £1m
“Under pressure to showcase a proposal with wide appeal, odds are on for the Chancellor to propose a significant increase in the IHT threshold, even if its introduction is spread over the life of the next Parliament.” according to Tina Riches, national tax partner at Smith & Williamson, the accountancy and investment management group.
This would appeal to swathes of middle class families, notably in London and the South East, who have seen house prices rise dramatically in recent years.
Despite much media coverage of a potential mansion tax, this does not make a comfortable bed-fellow with a rise in the inheritance tax threshold. It would hit the asset rich-cash poor group, such that it might have to be levied by way of a legal charge on the property, payable when the property is sold or the owner dies. This sounds like another inheritance tax in all but name - meaning what is given by an IHT threshold hand could be removed by the mansion tax hand.
Simplification in employment taxes for benefit of SMEs
The mooted abolition of the £8,500 threshold for benefits-in-kind, coupled with a trivial exemption and automatic dispensation from including some benefits on a form P11D, will make it easier for employers, especially small organisations, to run their payroll.
If the threshold were set at a suitable level, small gifts, such as a turkey, could to be given to staff at Christmas without the need for cumbersome returns. Similarly, other business expenses could be reimbursed without having to arrange a special dispensation.
Restricting personal allowance for non-residents could deter non-UK sports people or entertainers from taking part in the UK
Following increases in the personal allowance and the potential loss to the Exchequer, it has been mooted that non-UK residents should not benefit from a personal allowance.
But caught by this, for example, could be hundreds of entertainers, including musicians and sportspeople, who make short visits from overseas to make a handful of performances, often for relatively low rates in the UK, but who may not benefit from double tax relief in their own country.
“This would clearly deter them or the organising bodies from coming to the UK. Special dispensations had to be introduced for the Olympics and Commonwealth Games and without these relaxations in the rules, it is likely that many sportspeople would have been deterred from taking part,” explains Tina.
Although eyes are focused on the Autumn Statement, this typically provides only outline proposals, with greater detail released in the Finance Bill on the 10th of December and in consultation documents issued also in December.
National Tax Partner
T: 020 7131 4252
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
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