Starting rate of savings tax
The band of savings income that is subject to the 0% starting rate will be kept at its current level of £5,000 for 2016-17.
Employment intermediaries and tax relief for travel and subsistence
As announced at Summer Budget 2015, the government is to legislate to restrict tax relief for travel and subsistence expenses for workers engaged through employment intermediaries, such as umbrella companies or personal service companies, and working under supervision, direction or control. Relief will be restricted for individuals working through personal service companies where the intermediaries’ legislation applies. This change will take effect from 6 April 2016.
Company car tax diesel supplement
The three percentage point differential between diesel and petrol cars, which was due to be abolished from 6 April 2016, will be retained until April 2021 when EU-wide testing procedures will ensure new diesel cars meet air quality standards even under strict real world driving conditions.
Employer-provided living accommodation
Following recommendations from the Office of Tax Simplification report on simplifying the administration of employee benefits and expenses, the government is to consult on the current tax treatment of employer provided living accommodation.
Following a recent consultation the government will legislate to simplify the tax treatment of income from sporting testimonials. Broadly, from 6 April 2017, all income from sporting testimonials and benefit matches for employed sportspersons will be liable to income tax and NICs. In addition, an exemption of up to £50,000 will be available for employed sportspersons with income from sporting testimonials that are not contractual or customary. The legislation will apply where the sporting testimonial is granted or awarded on or after 25 November 2015, and only to events taking place after 5 April 2017.
London Anniversary Games and World Athletics and Paralympics Championships
Non-resident competitors in the 2017 World Athletics and Paralympics Championships and the 2016 London Anniversary Games will be exempt from income tax on earnings from the events. This will be the last year that the exemption applies to the London Anniversary Games as the Olympic torch is passed to Rio de Janeiro.
Business investment relief
The government is to consult on revisions to the business investment relief provisions to encourage greater use of the relief to increase investment in UK. Broadly, the relief allows individuals eligible to use the remittance basis, to bring foreign income and gains to the UK tax-free for the purposes of making a qualifying investment.
VCTs: eligible investments
From 30 November 2015, the provision of reserve energy generating capacity and the generation of renewable energy benefiting from other government support by community energy organisations (as introduced in Finance (No. 2) Act 2015) will no longer be treated as qualifying activities. In addition, these activities will not be eligible for Social Investment Tax Relief (SITR). From 6 April 2016 all remaining energy generation activities will be excluded from VCTs as well as from the enlarged SITR. The government will also introduce increased flexibility for replacement capital within EIS and VCT, subject to state aids approval.
Employee share schemes: simplification of the rules
A number of technical changes to simplify aspects of the tax rules for tax-advantaged and non-tax-advantaged employee share schemes are to be introduced. The changes are aimed at providing more consistency, including putting beyond doubt the tax treatment for internationally mobile employees of certain employment-related securities (ERS) and ERS options. Any charge to tax will arise under the rules that deal with ERS options, rather than earnings. These simplification measures are to be included in the Finance Bill 2016.
Income tax exemption for certain World War II victims
Certain pension and annuity payments made by the Netherlands government payable to victims of national-socialist and Japanese aggression during World War II (under the Netherlands Benefit Act for Victims of Persecution 1940-1945) will be exempt from income tax with effect from April 2016.
Dependant scheme pensions
Legislation will be introduced in Finance Bill 2016 to simplify the test that takes place when a dependant’s scheme pension is payable.
Following the introduction of a single-tier pension from 6 April 2016, legislation will be introduced to enable the pension tax rules on bridging pensions to be aligned with Department for Work and Pensions legislation. This measure will be included in Finance Bill 2016.
Individual savings accounts
There will be no change to the Individual Savings Account (ISA), Junior ISA or Child Trust Fund (CTF) annual subscription limits for 2016-17. The ISA limit will remain at £15,240, and the Junior ISA and CTF annual limits will remain at £4,080. The list of qualifying investments for the new Innovative Finance ISA, which will be introduced from 6 April 2016 for loans arranged via a P2P platform, will be extended in Autumn 2016 to include debt securities offered via crowdfunding platforms. The Government will continue to review the case for extending the list to include equity crowdfunding. Legislation will be included in Finance Bill 2016 to allow the ISA savings of a deceased person to continue to benefit from tax advantages during the administration of their estate.
CGT payment window
From April 2019, a payment on account of any capital gains tax (CGT) due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal. This will not affect gains on properties which are not liable for CGT due to private residence relief. The government will publish draft legislation for consultation in 2016.
CGT on residential property gains
From April 2019, capital gains tax due on the sale of residential property will be payable within 30 days of completion of any disposal of the property. The new regime will not affect gains on properties which are not liable for CGT due to private residence relief. Draft legislation will be published for consultation in 2016, for inclusion in Finance Bill 2017.
IHT exemption for compensation and ex-gratia payments to victims of persecution during the World War II era
Legislation will be included in Finance Bill 2016 to enact the provisions of the current extra statutory concession F20 (ESC F20), which gives an inheritance tax exemption in respect of certain compensation and ex-gratia payments for World War II claims. The legislation will include payments made under a recently created compensation scheme known as the Child Survivor Fund. The change will apply to deaths on or after 1 January 2015.
IHT and undrawn pension funds in drawdown pensions
The legislation will be included in Finance Bill 2016 to ensure a charge to inheritance tax will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. This measure will be backdated to apply to deaths on or after 6 April 2011.