BREAKING – When George Osborne was fired a naive part of me hoped the new Chancellor of the Exchequer would reverse some of his cruel policies.
Here I’m not talking about the swingeing cuts in Government spending – those are all absolutely vital to tackle the colossal debt mountain (it’s heading towards £2 trillion in case you were wondering).
What I would call cruel is making someone pay tax on income they haven’t earned.
Imagine your taxable income’s £50,000 and someone from the Ministry of Tough Luck comes along and says, “actually that’s not how things work around here anymore. From now on we’re going to pretend you earned £100,000.”
That’s pretty much what’s happening to many landlords with the cut in mortgage tax relief.
Coupled with the big stamp duty increase, it’s clear Oik Osborne (as he was known to his chums in the Bullingdon Club) wanted to protect wealthy landlords from tax increases and crucify those who simply aspire to being wealthy.
After all, the wealthiest landlords have already bought their properties (and therefore won’t be paying the new 3% stamp duty surcharge) and have already paid down their mortgages (and therefore won’t be denied tax relief on their interest costs).
As naive as I may be, however, I never truly believed Philip Hammer Hammond would reverse any of the unfair property tax changes introduced by his predecessor. Why? Because the simple truth is that the only people who feel sympathy for landlords these days are landlords themselves.
If you’ve been sitting on your hands, hoping and praying that these iniquitous tax changes will be reversed you should perhaps think twice.
In the end there were very few tax changes announced in the autumn Statement:
• Budgets. There will be a spring 2017 Budget but thereafter Budgets will be delivered in the autumn, with the first one taking place in autumn 2017.
• Tax thresholds. The Government remains committed to raising the personal allowance to £12,500 and the higher-rate threshold to £50,000 by 2020/21.
• National insurance alignment. From April 2017 the employer and employee national insurance thresholds will be aligned at £8,164.
• National insurance – self employed. Class 2 NICs will be abolished from April 2018 and benefit entitlement will be based on class 4 contributions.
• Termination payments. From April 2018 termination payments over £30,000, which are subject to income tax, will also be subject to employer NICs.
• Salary sacrifice. The tax and national insurance advantages of salary sacrifice schemes will be removed from April 2017, except for pensions, childcare, Cycle to Work and ultra-low emission cars. There is some protection for arrangements that are already in place.
• Pension contributions. The money purchase annual allowance will be reduced to £4,000 from April 2017. This is the amount you can save in a pension after you start withdrawing income.
• Corporation tax. The Government has confirmed that it will cut corporation tax to 17%by 2020. No further cuts were announced.
• Fuel duty. The fuel duty rate will remain frozen for the seventh successive year, apparently saving motorists around £130 a year.
• Employee shareholder status. The tax advantages will be abolished for arrangements entered into on or after 1 December.
• Non-resident companies. The government is considering making all non-resident companies that earn income in the UK pay corporation tax.
• Incorporation. It seems the Government wants to further erode the tax benefits enjoyed by company owners, although the details are sketchy so far:
“The OBR has today highlighted the growing cost to the Exchequer of incorporation. So the government will consider how we can ensure that the taxation of different ways of working is fair between different individuals, and sustains the tax-base as the economy undergoes rapid change. We will consult in due course on any proposed changes.”
Supplied to LandlordZONE by Nick Braun, founder Tax Café – publishers of leading specialist UK property tax guides www.taxcafe.co.uk
— LandlordZONE (@LandlordZONE) November 23, 2016