Autumn Statement

The Chancellor, George Osborne, brought forward few changes to the tax system in his Autumn Statement, the big news was all about the spending review and the reversal of the changes to tax credits.

Overall the economy is doing well which gives him the ability to make a step back from austerity.

Buy to Let

The big tax change is that from next April buy to let landlords and overseas buyers will pay a 3% stamp duty surcharge. This comes after the restriction of interest as an allowable expense for higher rate tax payers. In many ways the context he set is as interesting as the specific announcements:

  • Home ownership has decreased especially amongst younger adults.
  • He wants to increase home ownership as a stated policy.
  • If home ownership is to increase the number of properties owned by private landlords must decrease, he is setting out to make the economics of buy to let less attractive.

As an aside he will know full well that home owners are much more likely to vote Conservative than tenants…..so this is political as well as economic and ideological.

When you put these facts together I would act carefully as a buy to let landlord.

Contractors

The news was….no news! Contractors will still have their expenses restricted from April next year and the dividend tax will hurt. But no significant changes (The scare stories in the Daily Mail did not come to pass!).

Company and Dividend Tax

The new system starts as planned in April next year. A director being paid a modest salary and dividends will suffer tax as follows when you combine the new 19% Corporation Tax and the Dividend Tax:

£ 2015/16 2016/17
First 10,600 0 0
10,601 – 15,600 20 19
15,601 – 42,385 20 25.1
42-386 – 47,385 40 25.1
47,385 – 100,000 40 45.7

 

Other

The Apprentice levy does not affect small businesses. (payroll under £3,000,000!). There are some technical anti avoidance rules being brought forward,

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