Tax update for Professionals - April 2016

  • Changes to Capital Gains Tax and Entrepreneurs’ Relief

    There has been an 8% reduction in the rates of Capital Gains Tax (to 20% for higher rate payers and 10% for basic rate payers), but not on sales of residential property or carried interest.
  • Tax on dividends and shareholder loans

    From 6 April 2016 the rates of tax on dividend income have increased by 7.5% (to 7.5% for basic rate tax payers, 32.5% for the higher rate band and 38.1% for additional rate payers) with a 0% rate band introduced for the first £5,000 of dividends received.
  • Company liquidations and other transactions in securities

    6 April 2016 saw a change in how certain company distributions are taxed, with a targeted anti-avoidance rule moving certain distributions out of capital gains tax (tax rate between 10% and 28%) to the dividends tax regime (tax rates up to 38.1%).
  • Saving for the future – here comes LISA

    The widely anticipated reform of the pensions system did not feature in the Budget, but there was an indication of how this could possibly develop in future with the introduction of the Lifetime Individual Savings Account (LISA).
  • Count down to Making Tax Digital

    The phasing in of digital tax accounts starts in April 2018 for business below the VAT registration threshold and individuals with more that £10,000 secondary income.
  • Additional residential property purchases

    The additional 3% stamp duty land tax is now in force for acquisitions of additional residential property.
  • Salary sacrifice

    There is a shake up on the horizon for salary sacrifice arrangements with the Government announcing its intention to consult into their continued use.
  • Off payroll working in the public sector

    From April 2017 public sector bodies will become responsible for paying over the correct tax when they use the services of individuals operating through personal companies.
  • Disguised remuneration schemes

    A new targeted anti-avoidance rule has been introduced to tackle current and historic use of disguised remuneration schemes and transitional relief is to be withdrawn for taxpayers who have not reached a settlement with HMRC before 30 November 2016.
  • Annual Tax on Enveloped Dwellings

    The annual charge on residential properties held by non-natural persons now applies for properties with a value of £500,000 or over, with these properties also subject to capital gains tax, rather than corporation tax, on disposal.
  • Corporation tax rates and loss relief

    The single rate of corporation tax will fall to 19% on 1 April 2017 and to 17% on 1 April 2020. As always, when there is a reduction in tax rates companies will be looking for ways to accelerate deductible costs and defer profits until after the lower rates come into force.
  • Tackling corporate tax avoidance

    Various anti-avoidance measures are being introduced, particularly targeted at globally mobile companies.
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