Property transaction taxes
In the Autumn Budget, the Chancellor announced an exemption from Stamp Duty Land Tax (SDLT) for first-time home buyers. From 22 November 2017, there is an exemption from SDLT on the first £300,000 when buying a home, where the total price of the property is not more than £500,000. 5% is payable on purchases between £300,000 and £500,000.
However, with devolved taxes, buying a property in Scotland and Wales can bring different tax consequences.
In Scotland Land and Buildings Transaction Tax (LBTT) applies instead of SDLT. Therefore an LBTT relief for first-time buyers of properties up to £175,000 has been proposed in the Scottish Draft Budget 2018/19. This is subject to a government consultation before the relief launches in 2018/19.
Welsh first-time buyers benefit from the Budget SDLT relief until 31 March 2018. Land Transaction Tax (LTT) replaces SDLT in Wales from 1 April 2018. The starting rate for LTT will be £180,000, benefiting not just first-time buyers but other home buyers in Wales. A higher rate, of 3% over standard rates for additional residential properties, applies to purchases throughout the UK whether SDLT, LBTT or LTT applies.
Extension of offshore time limits
HMRC is asking for views on the design principles for legislation to implement a new minimum tax assessment time limit of 12 years for HMRC to make assessments or notices of determination in cases involving offshore income, gains or chargeable transfers.
The current assessment time limits are ordinarily four years (six years in the case of carelessness by the taxpayer). HMRC wants to extend the time limit because it can take much longer to establish the facts about offshore transactions, particularly if they involve complex offshore structures.
Making Tax Digital – sanctions for late submission and late payment
Following significant support on consultation, the government intends to take forward points based late submission penalties. There will be further consultation on the draft legislation to be published in summer 2018.
Business rates have been devolved to Scotland, Northern Ireland and Wales. The business rates revaluation in England currently takes place every five years. In the Autumn Budget, the government announced an increase in the frequency of valuations to every three years following the next revaluation. The Chancellor has now announced that the next revaluation will be brought forward by one year to 2021. It will be based on market value rentals at 1 April 2019.
Increasing the frequency of valuations and now bringing the next revaluation forward is a sensible approach which encourages businesses to plan ahead and budget for the changes. However, let’s not ignore the knock-on effect on businesses in the retail sector which are already under pressure. The sector is currently struggling with issues including competition from online retailers, declining footfall on the high street and restaurant closures and now it needs to factor in the earlier revaluation. Retail businesses will need a further rethink of their financial planning and how to remain profitable whilst waiting to see the outcome of the rate revaluation and whether they may receive the benefit of a rate reduction or a refund from the "Check, Challenge, Appeal" system.
Tackling the plastic problem
The government will call for evidence as to how changes to the tax system could be used to reduce the amount of single-use plastics that are wasted by reducing unnecessary production, increasing re-use and improving recycling. The government would also like to explore how to drive innovation in this area to achieve the same outcomes. Read the consultation here.
Other consultations to be issued
In his speech, the Chancellor announced consultations would be issued on:
- how to help the UK’s least productive businesses to learn from, and catch-up with, the most productive
- how to eliminate late payments particularly to benefit small business
- whether the use of non-agricultural red diesel tax relief contributes to poor air quality in urban areas
- consultation on reduced Vehicle Excise Duty rates for the cleanest vans.