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Please note that our Christmas Closure will be as follows:
Closed  - Thursday 24 December 2015 12:30
Re-Open - Monday 4 January 2016 8:30

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The latest changes to employment law


Each October new employment law legislation is introduced, resulting in some important changes for employers. Here we outline some of the key changes coming into effect on 1 October:

National Minimum Wage increase

The National Minimum Wage increases from £6.50 to £6.70 for workers aged 21 and over from 1 October 2015. The minimum wage will also rise for younger workers (those aged 18-20, and under 18s) with the minimum hourly rate being increased to £5.30 and £3.87 respectively. Apprentices also stand to gain from a wage increase as the hourly rate of £2.73 rises to £3.30 per hour.
Smoking in cars containing children is banned

Company vehicles are already covered by existing smoke-free legislation. However, from 1 October, drivers of private cars in England and Wales will be banned from smoking cigarettes if passengers aged under 18 are present. The new legislation will affect those employees using a company car for family purposes, so employers are advised to review their company car and smoking policies.

Section 54 of the Modern Slavery Act 2015 becomes law, subject to Parliamentary approval

Issues such as forced or compulsory labour, servitude and human trafficking are examples of existing modern slavery. From October 2015, businesses with a turnover of £36 million or more per annum will be required to publish a modern slavery statement every year. Such employers will have to state the measures that they have taken to prevent modern slavery from existing in their business or supply chain.

New Fit for Work service to begin accepting employer referrals  

The new Fit for Work service (FFW) introduced by the Government is to be fully functional by the autumn. The service aims to aid employees in returning to work after a period of sickness or absence. Advice from occupational health can be obtained through the Fit for Work website and telephone helpline. As part of the new service, employers will be able to refer their employees for free occupational health assessments if an employee has been absent from work for a minimum of four weeks.

For the latest advice on running your businesses, from employing staff, to tax-efficient strategies, please contact us.


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New Living Wage 'to benefit one-in-three working women'

The introduction of the National Living Wage (NLW) means that some 3.7 million women will benefit from a pay rise by 2020, according to new research from the Resolution Foundation.
Conor D’Arcy, the think tank’s policy analyst, advises that ‘because of their concentration among the low paid, women will account for the majority of the winners.
This will have a positive – though modest – effect on the gender pay gap, and will particularly help those working part-time’.
Additionally, the report also suggests that 2.3 million male workers will benefit from the introduction of the NLW.
In total, some six million employees – nearly one in every four workers – stand to see their wages increase by 2020 either as a direct or indirect result of the new NLW.
Announced in the Chancellor’s July Budget, the NLW of £7.20 an hour comes into effect in April 2016. This wage will only apply to those workers aged 25 and above.
The research indicates that some workers who already earn more than the recommended NLW will gain from the ‘ripple effect’ of rises.
However, many employees’ earnings will rise in line with the current National Minimum Wage (NMW). The NMW currently stands at £6.50 an hour, rising to £6.70 next month.
Earlier this week, the Government unveiled plans for tougher penalties for employers who fail to meet minimum wage requirements.

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Employment, commercial, pension & tax updates

Read some of the latest cases and judgements that may affect you.
Indirect discrimination: protected characteristics
Businesses should be made aware of an ECJ judgment that will have huge implications for indirect discrimination law in the UK. The court held that a person may claim indirect discrimination under the Race Directive (2000/43/EC) even though they do not possess the protected characteristic that has given rise to the discriminatory practice in question. If everyone is intended to be the beneficiary of the rule against indirect discrimination, it will become harder for businesses to identify who might bring a claim. People who could not previously establish that they belonged to a disadvantaged group may seek to bring claims if they are "suffering alongside" a disadvantaged group.
A man making a request to work part-time for childcare reasons and being refused, on the basis that there is a requirement to work full-time, is a good example. He would struggle to establish that he belonged to a disadvantaged group (it being commonly accepted that a requirement to work full-time disadvantages women more than men due to their greater role in childcare). However, this case strongly suggests he could bring his claim as a person suffering alongside the disadvantaged female group.
Partnership: joint liability of partnerships
A Court of Appeal decision provides a warning to owners of businesses that trade as a partnership. The court held that a partner was jointly and severally liable to a third party for the breach of fiduciary duty of another partner (L). This was the case even though L's breach of duty occurred after L had resigned from the partnership.
In this instance, the innocent partner was not exonerated from liability arising from acts that were sufficiently closely connected with the acts that the defaulting partner had been authorised to do, as they were regarded as being done in the ordinary course of the partnership's business.
The partners were also held to be jointly and severally liable for the claimants costs in pursuing the claim and appeal, subject to a 50% reduction to reflect the fact that the claim in negligence had failed.
Pensions auto-enrolment: guidance for businesses
The Pensions Regulator has issued further guidance for small and micro employers in response to research that suggests they need support in choosing a pension scheme for auto-enrolment purposes. The Regulator now estimates that 1.8 million small and micro employers are likely to reach their staging dates over the coming three years, up from the previous estimate of 1.3 million. According to the Regulator, the rise is attributable to an increase in small business start-ups and a decline in the number of business failures. The peak is likely to occur in the second quarter of the 2017/18 financial year when about 349,000 mainly micro employers reach their staging dates.
Data protection: monetary penalty notices
According to its annual report, in 2014/15, the Information Commissioner's Office (ICO) imposed civil monetary penalties amounting to over £1 million, including fines for data loss (£692,500) and unsolicited marketing communications (five penalties totalling £386,000). The ICO also prosecuted in 13 cases involving unlawfully obtaining or disclosing personal data, resulting in ten criminal convictions.
SMEs: tax relief for research and development expenditure
Small or medium-sized enterprises (SMEs) in financial difficulties will be reassured by a First-tier Tribunal (Tax Chamber) decision concerning research and development (R&D) relief. The tribunal held that debt restructurings, such as debt-for-equity swaps, should not lead to a loss of R&D relief, as long as the investor leaves the day-to-day management of the business in the hands of the existing management team.
In this case, a company remained entitled to R&D relief as a SME despite a banking group being a substantial shareholder. The group's shareholding was such that, absent any exemption, the group's balance sheet would have to be taken into account in applying the SME limits (leading the company to lose SME status). However, the group was an "institutional investor" and was therefore ignored for these purposes as it was not involved in the day-to-day running of the company, and did not provide the company with financial strength or advantage exceeding that of other SMEs.
Working Time Regulations: statutory holidays and sickness absence
The Employment Appeal Tribunal (EAT) has held that the Working Time Directive (2003/88/EC) does not require workers on sick leave to provide evidence that they are physically unable to take annual leave to carry over accrued unused statutory holiday to a subsequent leave year. It is sufficient that they are absent on sick leave and do not choose to take annual leave during that period.
However, the EAT also held that the right to carry over leave is not unlimited. Consequently, businesses should read the Working Time Regulations 1998 (WTR) as permitting a worker to take annual leave within 18 months of the leave year in which it accrues where they are unable or unwilling to take it because they are on sick leave. Accrued leave that goes beyond that cut-off period will lapse.

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Auto Enrolment - Key Questions

Auto enrolment, part of the government’s workplace pension reforms, has been introduced to combat the issue that people are living longer and healthier lives but are saving less for their retirement.
As the ratio of workers to those of a pensionable age continues to fall, the government has estimated that as many as seven million people are currently not saving enough for an adequate retirement income.
As state pensions will be unable to bear the increasing numbers of retirees, The Pensions Act 2008 established new duties to redress this imbalance. Automatic enrolment, as part of these changes, began to be rolled out amongst businesses in October 2012.
The changes brought about by the new legislation are complex and require early education and preparation to allow businesses to gain a full understanding of how to capitalise, adapt, and ensure compliance.
With 32,000 businesses staging during the 2014-2015 financial year, the numbers seeking support and advice about the legislative transition will increase considerably.

How is your staging date calculated?

• Your staging date is based on the PAYE data provided to The Pensions Regulator (TPR) by HMRC on 1st April 2012 – employers will then be contacted by TPR 12-18 months before their staging date and then again 3 months before their staging date

• Your PAYE count is not necessarily equal to your number of employees

• You may have an earlier staging date if you have at least one person paid under a PAYE scheme larger than the employer’s “main PAYE” (e.g. parent company’s PAYE reference).

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Automatic enrolment is the biggest change to pensions in decades But, with so many people talking about it, it can be difficult to know what is and isn’t true.


Background to automatic enrolment

People are living longer, with healthier lifestyles; as a result, the ratio between the workforce and those at pensionable age is decreasing. People are also planning and saving less for their retirement.
The government estimates that around seven million people are not saving enough to give them the retirement income they want or expect. The current state pension cannot sustain this change, so as a result, workers are being encouraged to save for their retirement through workplace pension schemes.
The Pensions Act 2008 established new duties on employers aimed at tackling these issues and the changes began to be rolled out to businesses in October 2012.


Automatic enrolment means every worker in the UK will be forced to save into a workplace pension, without being given a choice.


There are certain criteria which workers must meet to be eligible for automatic enrolment.


Any pension scheme can be used for automatic enrolment. If I have a pension scheme in place this will be suitable.


Not necessarily.

Pension schemes can be used for automatic enrolment only if they meet certain criteria which have been set out by The Pension Regulator.

The scheme must reach certain quality standards so that employees get the most from their contributions.

 Employees who are eligible:

• Aged between 22 and the state pension age

• Working in the UK

• Earning above the minimum earning threshold If a worker meets all three of these criteria, he or she is classed as an ‘eligible jobholder’ and will be automatically enrolled into a workplace pension scheme.

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Welcome to the August 2015 Newsletter from A P Robinson

This month saw Chancellor George Osborne deliver his Summer Budget, during which he unveiled a raft of tax, business and welfare changes. Many of the headline measures have sparked fierce debate in the subsequent weeks, but concerns have also been raised over the proposed new apprenticeship levy, with the Confederation of British Industry (CBI) warning that the measure may fall short of solving the skills shortage facing many firms.

Meanwhile, a new study suggests that take up of annuities has fallen in recent months, with more people favouring income drawdown. The findings come in the wake of radical changes to the pension rules, which came into effect in April 2015.

Forward planning is always advisable, but in times of economic, financial and political change it is even more important. Our website covers a range of tax and financial planning issues designed to help you plan for a more prosperous future. Visit the Tax Strategies section to read more.

New apprenticeship levy 'may not solve skills shortage', warns CBI

The proposed apprenticeship levy on big businesses has been met with criticism by business groups who say the measures will not be enough to solve the 'skills crisis'.

The levy was announced by the Chancellor in his Summer Budget on 8 July and is intended to help the Government keep its Budget promise of delivering three million more apprenticeships over the next five years.

However, the Confederation of British Industry (CBI) has warned that the plans will not meet the needs of businesses for highly skilled individuals.

In a recent CBI/Pearson Education and Skills survey, 68% of the companies questioned said they expect their need for staff with higher level skills to grow in the years ahead, while 55% reported that they are not confident there will be enough people available in the future with the necessary skills to fill their high-skilled jobs.

The survey also showed that in all parts of the UK, 40% of businesses have provided remedial training in basic skills for adult employees, with 31% having to organise remedial training for school-leavers and 22% providing remedial support for graduates.

Some 310 companies took part in the survey, which together employ around 1.2 million people in the UK.
Commenting, CBI Deputy Director, Katja Hall, said: 'The new levy announced in the Budget may guarantee funding for more apprenticeships, but it's unlikely to equate to higher quality or deliver the skills that industry needs. Levies on training already exist in the construction sector where two-thirds of employers are already reporting skills shortages.

She added: 'Employers have a critical role in upskilling the workforce, but part of the deal must be for real business control of apprenticeships to meet their needs on the ground.

Worryingly, it's those high-growth, high-value sectors with the most potential which are the ones under most pressure.'

Meanwhile, latest figures from the Office for National Statistics (ONS) have revealed that unemployment increased substantially in mid-2015, with thousands more individuals out of work between March and May.

Unemployment rose by 15,000 during this period, taking the total figure to 1.85 million nationally, while the number of benefits claimants rose by 7,000 to 804,200. It is the first rise in the unemployment total for two years.

Responding to the rise in joblessness, Employment Minister Priti Patel said: 'We have to look at the figures not just on the quarter but over the last year, where employment actually rose by over a quarter of a million, so this is also a reflection of the strength of our economy, the fact that our economic recovery is well on track'.

The Government was also keen to point out that over the second quarter of 2015, total pay including bonuses grew by 3.2% compared to the previous quarter. While this fell short of the ONS predictions of 3.3%, it was the fastest improvement in real wages since before the financial crisis.

We can advise on a range of business issues - contact a member of the team to find out more.

Annuities take up falls as pension freedoms prove popular

Figures from the Association of British Insurers (ABI) show that the over-55s are increasingly favouring pension income drawdown policies over annuities.

Its research shows that 53% of those buying a retirement income chose an income drawdown policy, while 46% opted for an annuity.

Three years ago, annuities made up 90% of the total policies purchased, but since the pension freedom reforms came into effect in April the demand for drawdown policies has increased significantly, despite some providers failing to offer customers the option to withdraw partial cash sums as the Government intended.

The ABI said that in the two months after 6 April, 65,000 people exercised their new right to withdraw cash - taking out a total of more than £1bn. 

It seems that the general trend is for those with smaller pension pots to cash them out, while those with larger pots are using them to buy a regular income. The average cash pot taken was worth £15,500 - however, the average annuity purchase was for £55,750, while the average drawdown policy was for £69,900.

ABI director Dr Yvonne Braun said: 'Tens of thousands of people are successfully accessing the pension freedoms as intended, and on the whole, the industry has risen to the challenge of giving customers what they want'.

April 2015 saw the most radical changes to the pension rules for almost a generation. The reforms change the way in which savers can access and manage their pension pot, and include giving people access to their entire pension pot from age 55 onwards.

We can help you plan for a more prosperous future for you and your family - the Your Money section of our website offers a wealth of tips and information.


2 August Submission date of P46 (Car) for quarter to 5 July.
31 August  Annual adjustment for VAT partial exemption calculations (May VAT year end).


Tax Information

Tax Information page is an essential resource for you and your business, and includes a summary of the recent Summer Budget.

Your Business

Our tips and guides offer expert advice on all aspects of running a business. Visit the Your Business section of our website today.

Government announces Small Business Commissioner

The Small Business Minister, Anna Soubry, has announced plans to appoint a special commissioner to tackle the late payment culture.

Click here for the full story

FCA announces shake-up of savings industry

The Financial Conduct Authority (FCA) has revealed new plans to make it easier for customers to switch savings accounts - but has stopped short of very radical changes such as banning introductory bonus interest rates.

Click here for the full story

Tax avoidance measures increase revenue

An extra £2.7 billion in tax was collected by HM Revenue &; Customs (HMRC) in 2014/15 thanks to anti-avoidance and evasion measures, according to its Annual Report and Accounts.

Click here for the full story

First five sectors targeted in red tape review

The Government has launched a series of reviews in a bid to help save businesses £10 billion in red tape.

Click here for the full story

UK growth forecast lower than expected

The International Monetary Fund (IMF) has reduced its prediction for UK economic growth, along with several other G7 economies.

Click here for the full story

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Tax Free Childcare

The Government confirmed last week that it will not be introducing the proposed changes to tax-free childcare until 2017.
At present employees can salary sacrifice up to £55 per week (or £243 per month), per working parent, towards the cost of childcare vouchers.

This scheme allows individuals to pay wages over to a childcare provider, before tax and national insurance is taken from their wages and can result in savings of up to 32%, when considering the savings on payment of tax and national insurance. The maximum amount that can be sacrificed, per working parent, towards childcare vouchers is currently £2,916.
The Government has proposed changes to the tax-free childcare system which would mean that, before tax is paid, instead of sacrificing wages towards childcare costs, employees will be able to put up to £10,000 away towards childcare costs, for each child, to which the Government will contribute up to 20% of this. This would result in a saving of up to 20% on childcare costs and would likely be more beneficial to parents who have high childcare costs.

It is these current proposals that have now been shelved until 2017.

The current system will be open to new applicants and existing individuals receiving childcare vouchers, until such time as the Government introduce the new scheme. Once the new scheme is introduced employees will be able to continue under the existing scheme, if they are already a member of the same, unless one or more of the following applies:
  • They change employer
  • Their child has reached its 15th birthday (or 16th if disabled)
  • They do not receive childcare vouchers within a 12 month period
  • They complete the exit form and open up a new tax free childcare account, under the new proposed scheme, with National Savings and Investments
Childcare is a very important and costly decision for parents and one which should be given much consideration. Some employees will be better off remaining on the current scheme whereas others may benefit more from the newly proposed changes. There are eligibility criteria for both schemes and not all employers currently offer the current scheme.

For those of you considering having children, it is worth bearing in mind the proposed changes.  Once the new scheme is introduced you will not be able to join the current scheme, if you are not already a member and you could potentially save more under the current scheme.

Do you have any questions about childcare schemes (which may or may not be run by your employer) or do you need further information regarding childcare vouchers and what your employment rights are relating to family matters?

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Well, how do you think this has affected your business your lifestyle?

Check out below the outline of the changes that will be taking place.


Corporation tax

The corporation tax rate will be cut to 19% in 2017 and 18% in 2020. Payment dates for large companies will be brought forward.

National living wage

A compulsory wage for over 25s of £7.20 an hour will be introduced in 2016, rising to over £9 in 2020.


Dividend tax credit will be replaced by an annual tax-free allowance of £5,000. Tax rates of 7.5% and 32.5% will be set for basic rate and higher rate taxpayers on income from dividends.

Annual investment allowance

The allowance will be£200,000 from 1 January 2016.
National insurance
The employment allowance will rise from £2,000 to £3,000 from April 2016.
An apprenticeship levy will be introduced for large companies to help fund training.


Personal allowance
The personal allowance will rise from £10,600 to £11,000 from April 2016. The higher rate threshold will increase to £43,000 from April 2016.
Inheritance tax
A £175,000 transferable threshold for residential property passed to children and grandchildren will be phased in from 2017.
Property tax
Mortgage interest rate relief on buy-to-let property will be restricted to the basic rate of income tax. This will be phased in over 4 years starting in April 2017.
Rent-a-room relief
Rent-a-room relief will rise to £7,500 a year from April 2016.
The permanent non-domicile tax status will be abolished from April 2017.
Pension contributions tax relief for additional rate taxpayers will be tapered to a minimum of £10,000 a year from April 2016.
Working parents with children aged 3 or 4 will receive up to 30 hours of free childcare from September 2017.


A new roads fund will be created to ensure continued investment in the road network.
Student maintenance grants
Maintenance grants will be replaced by loans of up to £8,200 for new students from the 2016/17 academic year.
TV licence fees
The BBC will be responsible for funding the over-75s licence fee concession from April 2018.
Northern infrastructure
£30 million in additional funding will be provided to Transport for the North over 3 years.
Bank levy
Bank levy will be reduced over 6 years and replaced with an 8% surcharge on banking sector profits from 1 January 2016.
New vehicle excise duties will be introduced in 2017 and fuel duty will remain frozen.


Corporation tax rates

The corporation tax rate will reduce from 20% to 19% from 2017. A further reduction to 18% will follow in 2020.
Corporation tax rates
1 April 2015 to 31 March 2017
1 April 2017 to 31 March 2020
From 1 April 2020

Corporation tax payment dates

For accounting periods starting on or after 1 April 2017, the government will introduce new corporation tax payment dates for companies to pay in quarterly instalments in the third, sixth, ninth and twelfth months of their accounting period.
This measure affects companies with annual taxable profits of £20 million or more. Where a company is a member of a group, the £20 million threshold will be divided by the number of companies in the group.
Annual investment allowance
The annual investment allowance for all qualifying investment in plant and machinery made on or after 1 January 2016 will be £200,000. The allowance is currently £500,000.
Employment allowance
From April 2016, there will be an increase in the annual employment allowance from £2,000 to £3,000.
Companies where the director is the sole employee will no longer be eligible to claim the employment allowance from April 2016.
Restriction of corporation tax relief
The corporation tax relief a company may obtain for the cost of ‘goodwill’, such as the amount paid for the reputation or customer relationships of the business purchased, will be restricted for all acquisitions and disposals on or after 8 July 2015.
This measure removes the tax relief that is available when structuring a business acquisition as a business and asset purchase so that goodwill can be recognised and amortised over time.
This advantage is not generally available to companies which purchase the shares of the target company. Removing this relief reduces this distortion and levels the playing field for merger and acquisition transactions.
R&D tax credits: universities and charities
A measure to amend an anomaly in the R&D tax credits legislation was announced so that universities and charities are unable to claim R&D credit, in line with the original intention of the policy. This will apply to expenditure incurred from 1 August 2015.
Controlled foreign companies loss relief restriction
From 8 July 2015, the government will remove the ability for companies to use UK losses and reliefs against a controlled foreign company charge.
This change should improve the effectiveness of the controlled foreign company regime in both deterring the diversion of profits and taxing any diverted profits.
Disposal of stock other than in trade
Amendments are to be made to the legislation to stop corporate groups from using a transfer pricing override to manipulate the value of assets in intergroup transfers.
The changes relating to trading stock and intangible assets have been introduced to ensure that disposals made other than in the normal course of business are brought into account for tax purposes at full market value.
Taxation of carried interest
The government will introduce legislation to ensure that sums which arise due to investment fund managers by way of carried interest will be charged to the full rate of capital gains tax, with only limited deductions being permitted. This measure will be effective from 8 July 2015.
Employee benefits and expenses
A statutory exemption is to be introduced from April 2016, which is intended to simplify the tax system by introducing a statutory exemption for trivial benefits in kind costing less than £50.
Self-employed national insurance contributions
Consultation will commence in autumn 2015 on abolishing Class 2 national insurance contributions (NICs) and reforming Class 4 NICs for the self-employed.
Bank corporation tax surcharge
A supplementary tax of 8% on banking sector profits will be introduced from 1 January 2016.
The tax will apply to the banks’ corporation tax profits prior to the use of any existing carried forward losses. The first £25 million of profit within a group will not be subject to this tax charge.
Where a company’s accounting period straddles 1 January 2016, the period will be split and the surcharge will apply to profits of the notional period commencing on 1 January 2016.
Bank levy
A reduction to the full bank levy rate will be implemented changing the rate from 0.21% to 0.18% in 2016.
New legislation will also be introduced to change the tax base to UK operations only from 1 January 2021.
Personal allowance increase
The income tax personal allowance will increase from £10,600 in 2015/16 to £11,000 in 2016/17. It will further increase to £11,200 from 2017/18.
Personal allowance indexation change
The government will legislate to ensure that once the personal allowance reaches its target of £12,500 it will be uprated in line with the national minimum wage (NMW). The aim of the proposal is to ensure that any person on the NMW working 30 hours per week or less is unlikely to pay income tax. A review into aligning the NMW timeline with the tax year was also announced.
Higher rate threshold increase
The higher rate threshold will increase from £42,385 in 2015/16 to £43,000 in 2016/17. It will increase to £43,600 in 2017/18. There will be a corresponding increase in the national insurance contributions upper earnings limit to ensure it remains aligned with the higher rate threshold.
Higher rate threshold

Tax on dividends

The government has introduced major changes to the taxation of company dividends. This is likely to increase the taxation liability of many director/shareholders of limited companies.
The dividend tax credit will be abolished and replaced with a new dividend tax allowance of £5,000 per year from April 2016.  New rates of tax on dividend income above the allowance will be introduced, which will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
The announcements were not accompanied by any detail so the impact of this change will become clearer as further documents are made available.

Restricting finance cost relief for landlords

The government will restrict the relief on finance costs, including mortgage interest payments, available to individual landlords of residential property to the basic rate of tax. The restriction will be phased in over a 4 year period, starting from April 2017.
Increase in rent-a-room relief
The level of rent-a-room relief will increase from £4,250 to £7,500 from April 2016 to help the growing numbers of individuals renting out their spare rooms.
Wear and tear allowance changes
The government will replace the existing wear and tear allowance with a new relief that will allow all residential landlords to deduct the actual cost of replacing furnishings from April 2016.  Capital allowances will continue to apply to landlords of furnished holiday lets. A technical consultation will be published on the new relief before the summer.
Abolishing non-domicile status for long-term residents
Legislation will be introduced from April 2017 to ensure that anybody resident in the UK for more than 15 of the past 20 years will be deemed to be domiciled in the UK for tax purposes.
Non-domicile status for UK born individuals
From April 2017, any individual who is born in the UK to parents who are domiciled here will not be eligible to claim non-domicile status while they are resident in the UK.
Amendment to venture capital schemes
Subject to state aid approval, new measures were introduced to amend enterprise investment scheme (EIS) and venture capital trust (VCT) rules. Some of the measures include:
·    a new cap on the total investments a company may raise under EIS, VCT or other risk finance investments of £12 million or £20 million for knowledge intensive companies
·    preventing companies from using EIS or VCT investments to acquire a business and a requirement that investors are independent from the company at the time of the first share issue.
These measures will take effect from royal assent to the Summer Finance Bill 2015.

Tax-free childcare

Due to a legal challenge, tax-free childcare is to be launched from early 2017. In the meantime the existing scheme, employer supported childcare remains open to new entrants until the new scheme is introduced.
Savings and pensions

Lifetime allowance

The lifetime allowance for pension contributions is to reduce from its current level of £1.25 million to £1 million from 6 April 2016.
As on previous occasions when this allowance changes there will be transitional protection for pension rights already over £1 million in order to ensure that this change is not retrospective.
From April 2018 it is intended to index the allowance annually in line with CPI, which means that this should be the last of these reductions, which have seen the allowance reduce from £1.5 million.

Reduced annual allowance

From April 2016 there will be a reduction in the £40,000 annual pension allowance where income, including pension contributions exceeds £150,000.
The annual allowance will reduce by £1 for every £2 of income in excess of £150,000, down to a minimum of £10,000.

Further changes to pension relief

A consultation document was published which will further look at a reform of pensions tax relief. This will include reviewing whether the taxation of pensions should be more closely aligned with the taxation of ISAs.

Lump sum death benefits

From or after 6 April 2016, where someone dies at the age of 75 or over, taxable lump sum benefits will be subject to tax at the recipient’s marginal rate of income tax.
Where the recipient is, for example, a trust or a company and therefore does not have a marginal rate, the 45% charge will continue to apply.  

Equitable life

The Equitable Life payment scheme will close to new claimants on 31 December 2015. Further endeavours are to be made to trace remaining policyholders due £50 or more. There will be a further payment to Equitable Life policyholders on pension credit who received 22.4% of their relative loss. This payment will be for an additional 22.4% and is to be made in early 2016.

Inheritance Tax

Main residence and the inheritance tax nil-rate band

A change in line with the last 2 Conservative manifestos is to be introduced although the change is not to commence until 6 April 2017 and will not be fully implemented until 6 April 2020.
An additional inheritance tax (IHT) nil-rate band is to be introduced when a residence is passed on death to direct descendants.
Additional nil-rate bands
One spouse
Two spouses
Any unused nil-rate band will be transferred to a surviving spouse or civil partner. When added to the £650,000 existing nil-rate band (2 x £325,000) this could provide a total nil-rate band of £1 million for a married couple or civil partners.
From 2021/22 onwards the nil-rate bands will be increased in line with the CPI.
It was also proposed that this new nil-rate band will be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.
Final details are subject to a technical consultation.
There will also be a tapered withdrawal of the additional nil-rate band for estates with a net value of more than £2 million. This will be at a withdrawal rate of £1 for every £2 over this threshold.

The IHT nil-rate band

The government has confirmed that the current nil-rate band remains frozen at £325,000 until April 2021 – previously this was frozen until April 2018.

IHT and non-domiciles

From April 2017 the point at which a non-domiciled individual is deemed domiciled for IHT purposes will change to 15 out of 20 years.
It is also intended to treat individuals who were born in the UK to parents who are domiciled here, as UK domiciled while they are in the UK.

IHT on UK residential property of non-domiciles

From April 2017 IHT will be payable on all UK residential property owned by non-domiciles, including property held indirectly through an offshore structure regardless of their status for tax purposes.
A detailed paper was also published which it is intended to provide a basis for consultation later in 2015.

IHT avoidance

New rules are to be introduced to target avoidance through the use of multiple trusts as previously announced in Autumn Statement 2014.

Tax credit debt recovery

The recovery of tax credits is to be more intensive. HMRC will recover overpayments of working tax credit (WTC) from payments of child tax credit (CTC), and recover overpayments of CTC from payments of WTC.
HMRC will extend the use of the private sector to improve the collection of tax credit debt where this is in excess of £3,000 and has already passed through the extending tax credits debt collection process.

Increase in the tax credits taper rate

From April 2016 the taper rate in tax credits will increase from 41% to 48% of gross income. Once claimants earn above the income threshold in tax credits, it will be withdrawn at a rate of 48p for every extra pound earned.

Universal credit work allowances

From April 2016 the income thresholds in tax credits will reduce from £6,420 to £3,850 per year.
Work allowances in universal credit (UC) will be abolished for non-disabled childless claimants, and reduced to £192 per month for those with housing costs and £397 per month for those without housing costs. Claimants earning below these amounts will retain their maximum award.
Limit child element in tax credits and UC
The child element of tax credits and UC will no longer be awarded for third and subsequent children born after 6 April 2017. Multiple births and other exceptional circumstances will be protected from the 2 children limit.

Income rise disregard in tax credits

From April 2016 the amount by which a claimant’s income can increase in-year compared to the previous year’s income before it is adjusted is to be reduced from £5,000 to £2,500.

Benefits uprating

Most working-age benefits, for example Jobseeker's Allowance and Income Support, will be frozen for 4 years from April 2016. This freeze also applies to CTC and WTC (excluding disability elements).

Household benefit cap

The household benefit cap will be reduced to £20,000, except in Greater London where the cap will be £23,000.
Other measures

VAT on services enjoyed in the UK

HMRC will apply VAT ‘use and enjoyment’ provisions so that from next year, it will be clear that all UK repairs made under UK insurance contracts will be subject to VAT in the UK.

Insurance premium tax

From 1 November 2015 the standard rate of insurance premium tax will increase from 6% to 9.5%.

Vehicle excise duty

Purchasers of cars first registered on or after 1 April 2017 will be liable to a first year rate, which starts at £10 for cars with emissions of 1-50 g/CO2/km to £2,000 for cars with emissions in excess of 255 g/CO2/km.
A flat standard rate of £140 will apply in all subsequent years, except for zero-emission cars, which will continue to attract a £0 rate. Cars with a list price of over £40,000 will attract a supplement of £310 per year for the first 5 years in addition to the standard rate.
From 2020/21 all of the revenue raised from vehicle excise duty in England will be invested in England on the English Strategic Road Network.
Climate change levy
The climate change levy (CCL) exemption will be removed for renewably sourced electricity from 1 August 2015. There will be a transitional period for suppliers, from the same date, to claim the CCL exemption on any renewable electricity generated before that date.
Aggregates levy
The 2014 legislation that suspended exemptions from the aggregates levy is to be repealed. All exemptions apart from shale will be fully restored. Once the reinstatement of exemptions comes into force on 1 August 2015, businesses will be able to claim a refund of any aggregates levy paid since 1 April 2014 (with interest) on materials for which the exemption was found to be lawful by the European Commission.
National living wage
A new premium for those aged 25 and over starting at 50 pence will be introduced leading to a new national living wage (NLW) of £7.20 in April 2016. It is envisaged that the NLW could reach the government’s target of over £9 by 2020.
National minimum wage
The main NMW rate is set to increase by 20p per hour to £6.70 on 1 October 2015. The premium referred to above means that a current NMW worker working 35 hours a week can expect to see their income increase by over £1,200 from April 2016.
Illegal work enforcement
Additional investment is to be made available in NMW enforcement to tackle non-compliant employers and to help ensure that workers are aware of their obligations and rights.
Student maintenance
Maintenance loan support will rise for students from low and middle-income backgrounds up to £8,200 a year when studying away from home, outside London.
From the 2016/17 academic year, maintenance grants will be replaced with maintenance loans for new students from England, due to be repaid when their earnings exceed £21,000 a year.
Free childcare entitlement is extended to 30 hours a week for working parents of 3 and 4 year olds from September 2017.


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