Following the government's tax credit defeat in the House of Lords, the Chancellor has been left with finding potential alternative areas to achieve savings and improve tax receipts.
Entrepreneurs' relief, according to Merryn Somerset-Webb in MoneyWeek, costs the UK £3bn. It reduces the rate entrepreneur's pay to 10%, as opposed to 28%, on the first £10m of gains made from disposing/selling their companies.
Should entrepreneurs be incentivised to sell their businesses rather than continue to grow them? Then there's contractor's who run personal service companies and take dividends which can be more tax efficient than full time employment. The issue there being, when the time comes to close the company they can make use of entrepreneurs’ relief on the capital remaining within the business. Expect restrictions to be applied.
Potentially all active workers up to the age of 70 could end up making national insurance contributions and it's said this could take effect from as early as 2017. There is some logic behind it though, after all, why shouldn't an individual pay national insurance contributions on earned income once they have reached retirement age?
Staying on the subject of pensions, the reforms that take effect from April 2016 mean additional rate tax payers (people who earn £150,000+) face cuts to the annual amount they can place in their pension scheme to qualify for tax relief. This could result in an extra flow of contributions prior to the changes taking effect so as to make maximum use of the existing reliefs. The government may well introduce anti-forestalling measures as a means to restrict this activity. Expect such policies if they materialise to take place with immediate effect.
Ministers are considering measures to restrict the use of personal services companies by contractors. Anti avoidance measures, according to The Daily Telegraph could mean contractors are required to move onto a company's payroll if their work lasts longer than a month. That would force the company into becoming an employer and making employer National Insurance contributions.
It looks as if there will also be clampdown on people employed through umbrella companies in terms of what they can claim for travel and expenses. Unfortunately many contractors working through personal services companies are likely to also be caught by this. The Times reports that these claims cause an annual leakage of £400m to the Treasury's coffers.
Having encouraged people to purchase diesel engined vehicles in the noughties, we're now informed by scientists that actually this fuel emits particulates and nitrogen dioxide. Estimates suggest these pollutants could account for the death of 29,000 Britons a year.
With figures like that, expect diesel duty to rise at some stage in the future. If it happens in the Autumn Statement, there could be a possible 1p or 2p rise in diesel duty and increases to vehicle excise duty rates.
Osborne has spoken in the past of his desire to merge the two but there has never been any detail as to how this might happen. This might not be as far fetched as it seems. The Exchequer would achieve significant IT and staff related savings were such a merger to take place.
The content of this post is up to date and relevant as at 24/11/2015.
Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.
leave a comment -