Autumn Statement 2015 – Stamp Duty Land Tax

Higher rates of SDLT will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes, from 1 April 2016.

The higher rates will be 3 percentage points above the current SDLT rates. The higher rates will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property given the role of this investment in supporting the government’s housing agenda.

The government will consult on the policy detail, including on whether an exemption for corporates and funds owning more than 15 residential properties is appropriate.

The government will use some of the additional tax collected to provide £60 million for communities in England where the impact of second homes is particularly acute.

SDLT: changes to the filing and payment process

The government will consult in 2016 on changes to the SDLT filing and payment process, including a reduction in the filing and payment window from 30 days to 14 days. These changes will come into effect in 2017 to 2018.




Autumn Statement 2015 – Capital Gains Tax Payment Window

From 6 April 2019, it is proposed that the capital gains tax payable on the sale of a residential property will be payable 30 days after the sale of the property. At the moment, the tax is payable between 10 months and 22 months after the sale.

This new deadline will require solicitors and accountants to work together to calculate the gains in this new payment window and allow clients to meet their obligations.

At the moment the rate of capital gains tax is dependent on your income in the same period and there is also an annual exemption which might be set against the gain. Detail is awaited on how this new payment window will dovetail with the above matters and with the wider capital gains tax legislation. It may be that there will be a flat rate deduction of 28%, with the taxpayer having to reclaim any overpayment.

It should also be remembered that the sale of your home is exempt from Capital Gains Tax if it is your Principal Private Residence.

Autumn Statement 2015 – Tax Credits

A big surprise from the Chancellor in his announcement that Tax Credits are not to be reduced as originally planned.

The rate at which a claimant’s award is reduced as each pound of their income exceeds the income threshold (known as the taper rate) will remain at 41% of gross income from April 2016.

The income threshold will remain at £6,420 per year from April 2016. Claimants earning below this amount will retain their maximum award. Consequently the income threshold for child tax credit-only claimants will remain at £16,105 in 2016 to 2017.


Autumn Statement 2015

In what was expected to be an Autumn Statement filled with cuts and bad news, the measures set out today were much less than expected and there were some surprising and very positive announcements from the Chancellor. Higher tax receipts have given George Osborne room for manoeuvre in relation to spending, while also reducing the deficit ahead of target. In particular, he was able to perform a U-turn on the proposed changes to tax credits.

As expected, a country which lives within its means, supports its hard working people and improves living standards for all were certainly at the top of the agenda.


The North East

The Northern Powerhouse got a lot of air time, with clarity on the £400m fund which is set to aid regional development and help smaller businesses to grow. When taken together with separate funds across the North East, £500m will be available across the Northern Powerhouse.

Other measures designed to boost the North include:

  • £50m for transport in the North and £150m to make oyster style ticketing a reality across the whole of the North
  • £22m for Northern Powerhouse trade missions and new investment taskforce
  • £7m of funding through the regional air connectivity fund to support new air routes, promoting domestic and international connectivity. This will include new routes from Newcastle to Norwich.
  • New enterprise zones to attract private sector investment, 7 new zones will be created within the Northern Powerhouse region
  • Power over uniform business rates control to be devolved to local councils, “to help tackle geographical imbalances and give power to elected mayors to benefit local economies”

Stop Press: Four new grants announced…

Four new grants have been announced…

Two new grants for Teesside companies and two new grants for national companies – impacted by SSI’s recent closure anouncements in the steel indusry – have been announced.

The details are yet to be confirmed, but there will be more on the Tees Valley Unlimited website in due course.

  1. SSI Supply Chain Working Capital:

    a. Working capital grant of up to 200,000 Euros

    b. Applicants must demonstrate an impact due to the SSI announcement e.g. bad debts or working capital stress

    c. Nationwide

  2. Capital investment:

    a. 50% grant against capital investment of up to 200,000 Euros

    b. For SSI supply chain companies (manufacturing/service)

    c. Nationwide

  3. Teesside capital investment:

    a. 30% grant of up to £50,000 against capital investment

    b. Capital investment for growth purposes

    c. Tees Valley applicants only

    d. No due diligence or administration fees will be charged

  4. Teesside professional services:

    a. Grants for professionals services to help with growing companies or overcoming growth barriers

    b. 50% grant of between £2,500 and £25,000 against professional fees

    c. Tees Valley applicants only

Application is via two routes:
Or you can call Lee Jefferson or Steve Plaskitt at Tait Walker on 01642 676 888, who can assist with your grant applications and also with your business plans and growth strategy.

Update on the Base Erosion Profit Shifting (BEPS) Project


Over the past two years over sixty countries have been working together to identify gaps in international tax rules that allow multinational corporations to legally but artificially shift profits to low or no-tax jurisdictions. It is estimated that tax losses from BEPS amount to 4%-10% of global corporate income tax revenues (conservatively estimated to be $100-240bn annually).

On 5th October, the OECD presented its final package of measures to deal with BEPS. These measures are to be discussed further by G20 Finance Ministers on 8 October with the aim of generating co-ordinated reform of international tax rules.

The UK has taken a proactive stance to BEPS and has already introduced legislation around some of the recommendations. It has also taken a rather broad brush approach with the introduction of the diverted profits tax (DPT) legislation (see below). Furthermore, HMRC are in the process of setting up a DPT governance process and a specialist team to apply the DPT legislation in tandem with the UK’s transfer pricing and controlled foreign companies’ rules.

The key changes for multinational corporations and the UK’s response/actions are set out below.



Both the OECD and UN model Tax Treaties require the application of the OECD’s Transfer Pricing Guidelines. A new consolidated version of the OECD’s Transfer Pricing Guidelines will be published in 2017 which focuses on the economic substance of activities rather than their legal form, with the aim being to ensure that operational profits are allocated to the economic activities which generate them.

Finance Act 2015 which received Royal Assent on 26 March 2015 introduced diverted profits tax (DPT) legislation. This seeks to target profits which have been “diverted” from the UK tax net, either by the involvement of entities or transactions lacking economic substance, or through an avoided Permanent Establishment.

The legislation is complex and its interaction with the BEPS programme is unclear. If the OECD’s work on BEPS is successfully implemented across jurisdictions, it is possible that DPT could be withdrawn. However, for now the rules around DPT must be adhered to within the UK.



The aim of this measure is to give tax administrations such as HMRC a global picture of where MNE profits, tax and economic activities are reported. The tax administrations can then use thin information to assess transfer pricing and other BEPS risks.

The filing requirement will be on MNEs with annual consolidated group revenue equal or greater than EUR 750m. It is recommended that the first Country-by-Country reports be filed for accounting periods commencing on or after 1 January 2016. So for a company with a December year end, the Country-by-Country report must be delivered to tax authorities by 31 December 2017, which will in turn distribute it by 30 June 2018.

Finance Act 2015 included provisions to implement the OECD Country-by-Country reporting guidelines in the UK. On 5th October, HMRC published a technical consultation paper to open a discussion around how the rules will be implemented in the UK.




The aim of this measure is to ensure that Patent Box type incentives are only given where the related R&D is conducted within the same entity within that country.

The UK government has already amended its Patent Box regime to account for this provision. There are grandfathering rules under which IP within existing regimes by June 2016 can continue to obtain the full benefit of the regime until June 2021, at which point the new rules will apply.




Hybrids are an instrument or entity through which different treatment in two countries leads to two tax deductions being taken for the same expense, or one deduction without the equivalent income being taxed.

The OECD reports recommend that countries should disallow the expense where the payor country does not tax the related income. The difficulty in implementing this recommendation will be obtaining sufficient information to establish that there is a hybrid effect.

There is a further recommendation for Interest Restrictions. These state that countries should limit interest deductions to a fixed percentage of earnings before interest, tax and depreciation (EBITDA). The cap may be in the range of 10%-30%.

The UK tax code already incorporates rules around the “World Wide Debt Cap” to ensure that the interest relief claimed in the UK does not exceed the amount attributable to the group’s total worldwide external debt. However, it is likely that the UK will begin consultation in late 2015 on bringing its rules in line with OECD recommendations.




Instead of having to renegotiate individual treaties, the OECD has been working with over 90 countries to develop a multilateral instrument in order to allow countries to incorporate the tax treaty related BEPS measures into the existing network of bilateral treaties.

The multilateral instrument will be completed by the end of 2016, and will then be available for countries to ratify. It is expected that there will be significant optionality within the Instrument, such that participating countries may make different choices.




Proposed new model treaty provisions include:

  • Definition of the Permanent Establishment – The new definition will lower the threshold for recognising a taxable presence
  • Treaty Abuse – Countries have agreed to include anti-abuse provisions in their tax treaties, including a minimum standard to counter treaty shopping
  • Dispute Resolution – the measures aim to strengthen the effectiveness and efficiency of the Mutual Agreement Procedure (where cases are settled between countries)



The UK appears to be taking a lead in tackling aggressive tax planning in the global economy. However, implementation of the BEPS measures by jurisdictions across the world will be testing. The challenge will be to knit the various outcomes into a structure which reduces unfair outcomes and increases transparency without leading to excessive reporting requirements and harming international trade.

If you have any queries please contact Louise Barker or Alastair Wilson on 0191 285 0321.


Pension Awareness Day, 15th September 2015 – Top Tips

With huge pension reforms in place and lots of opportunities for savers, we’re pleased to see National Pension Awareness Day is hitting the Press today.

We’re working with our clients to help them make the most of the changes and plan for the future they want. Here are some tips from Scottish Widows to celebrate Pension Awareness Day:

  1. Don’t rush decisions
    First, remember to take your time. You have a lot to consider with a variety of savings options and new Pensions Freedoms. It’s important you don’t feel pressurised when deciding what to do, especially as some decisions can’t be changed. You could spend a long time retired – nearly one in five people currently in the UK will live to see their 100th birthday. Source: Age UK.
  2. Make use of the help available to you
    To help you understand your choices there’s a lot of support available online and in person. Do your homework and read all the information offered. We can arrange a free and impartial initial consultation to help you weigh up the pros and cons of different decisions. Your Financial Adviser can also share their expert opinion and discuss the options available to you.
  3. Plan the retirement you want
    If you don’t have a plan for the future, it’s important to focus on the sort of life you want first – and then find the retirement solutions to fit with it. You can fund your retirement with more than just your pension savings so consider all of your options and don’t forget to include the State Pension.
  4. Don’t pay more tax than you need to
    Consider how you take money from your savings as it can affect how much tax you will have to pay. For example, spreading your income over different tax years could dramatically reduce your tax bill. And if you take some of your pension pot while you are still working, it is added onto your salary for tax purposes. Tax rules can change.
  5. Scams awareness
    We know you may be concerned about who to trust and making the right decisions when it comes to retirement. Unless you know or recognise the brand name or company, be cautious if you are offered a free pension review. A great starting place is your existing provider, employer etc.


For further advice, please contact our Wealth Management team on 0191 285 0321.

Tait Walker Wealth Management is a trading style of Tait Walker Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.

All statements concerning the tax treatment of products and their benefits are based upon our understanding of current tax law and HMRC practices both of which are subject to change in the future. Levels and bases of reliefs from taxation are also subject to change

Tax planning is not regulated by the Financial Conduct Authority.

Buy to Let investors – what did the Summer Budget mean for you?

Following the Chancellor’s Summer Budget announcement, we have summarised the tax changes that Buy to Let investors should be aware of….


Relief for furniture and fittings

At present, a wear and tear allowance is given at 10% of the net rents received in respect of fully furnished let properties. This will be abolished from 6 April 2016 and, in its place, all landlords of residential property (whether fully furnished or not) will be able to claim only the actual cost of replacing furnishings. The deferral of capital expenditure until after 6 April 2016 to optimise tax relief should therefore be considered.


Relief for mortgage/loan interest for BTL investors

Individual landlords currently receive tax relief at their highest rate of income tax on all the interest they pay to finance their letting business. From April 2017, the amount of interest eligible for tax relief at the higher and additional rates (40% and 45%) will be restricted to the following:

  • 5% of the interest paid in 2017/18
  • 50% of the interest paid in 2018/19
  • 25% of the interest paid in 2019/20

The balance of the interest is not deductible in calculating the profit, but it does give a tax reduction equal to 20% of the interest, whether you are a basic rate or a higher rate taxpayer. Having modelled the effect of the new rules, some landlords will find that their annual tax bill will now exceed the cash rental profit being earned, if no action is taken.

These rules will not apply to the rental of commercial property or to properties that qualify as furnished holiday lettings. The rules will apply to the letting of residential properties by a partnership or LLP. Where a person has a loan which is used partly for residential property and partly not, the interest on the loan will have to be apportioned between the two elements.

BTL investors should start planning now

Individual property investors should start immediate planning to ensure the correct structure for their property rental business is in place.

It is increasingly popular for landlords to incorporate their property business and this should remain the case. The Limited Company will not be affected by the proposed restrictions to mortgage interest relief and it also provides several other opportunities from a tax perspective, including:

  1. The low rates of corporate tax, especially with the forthcoming reductions in the rate of corporation tax from 20% to 18% in coming years, means higher post-tax profits can be retained for reinvestment or be used to repay borrowing. When the corporate rate is 18% for every £100 of profit earned by a company, there will be £82 left after tax to reinvest, compared to £55 for an individual who pays income tax at the 45% rate.
  2. Despite the increases to dividend taxation to come into effect from 6 April 2016, there is still the opportunity for tax efficient remuneration from the company.

Should I incorporate my property business?

A reduction in the tax payable on the rental income by holding properties in a company is important, but this has to be balanced against the comparative treatment of capital gains as between a company and an individual.

If you are contemplating the transfer of properties, there would also be a need to manage potential liabilities to Stamp Duty Land Tax and/or Capital Gains Tax on those transfers.

Finally, if the properties are subject to a mortgage there will need to be negotiations with the lender about the proposed transfer of the properties to a company.

In summary, the incorporation of a property rental business is a matter which requires detailed consideration of the tax and practical issues of such a proposal. We have experience of guiding clients through these issues.

We strongly advise that you take advice based on your individual circumstances.

If you would like further advice about the changes outlined in the Summer Budget, or for planning the right structure for your property rental business, please contact Alastair Wilson on 0191 285 0321 or

Summer Budget 2015 – New tax regime for dividends

One of the major changes from the Summer Budget is that the taxation of dividends will be reformed from 6 April 2016.

The 10% dividend tax credit is abolished and, in its place, individuals will have a £5,000 dividend tax allowance. An individual will pay no income tax on dividend income received up to that amount. However, dividend receipts in excess of £5,000 will be taxed at:

  • 7.5% for basic rate taxpayers (previously 0%)
  • 32.5% for higher rate taxpayers (previously 25%)
  • 38.1% for additional rate taxpayers (previous 30.56%)

The new dividend allowance will represent a significant tax increase for owners of small companies who have been able to extract profits from their business with a tax-efficient mixture of salary and dividends.


In 2015/16, Alan takes a dividend of £27,000 net (£30,000 gross) from his personal company. His only other income is salary equivalent to his personal allowance. He pays no income tax on this combination of salary and dividend because it’s all covered by his personal allowance and basic rate band.

In 2016/17, Alan takes a dividend of £27,000 (gross, no tax credit) from his company and a salary equal to his personal allowance. He pays tax at 7.5% on £22,000 of that dividend after deducting the dividend tax allowance of £5,000. In 2016/17 he will pay income tax of £1,650 on the dividend.

The ‘tax lock’ prevents the Chancellor from raising the rate of income tax. The tax rise illustrated above is achieved by reducing the rate of tax on dividends from 10% to 7.5% while simultaneously removing the tax credit that balanced the 10% tax charge.

Some initial reactions from commentators were that people would switch back to paying salary instead of taking dividends. However, we ran calculations for different levels of Income Tax and NIC and it is still beneficial to take a dividend rather than salary, although the saving has been reduced. The saving is still particularly pronounced for a dividend if employee’s NIC would be payable on any salary at 12%, rather than at the 2% rate.

We are also exploring other options for profit extraction such as charging interest on credit balances on directors’ loan accounts and employer pension contributions. There can be a requirement to deduct 20% tax at source on interest payments by the company. Tax relief on pension contributions in respect of higher income individuals is to be restricted, but with the new pension freedom rules, pension contributions are more popular than they have been for some time.

When we prepare tax returns for clients for the year ended 5 April 2015, we will discuss the additional tax that they would have had to pay if the level of any dividends received had been taxed at the rates applicable from 6 April 2016. This will give them a good guide based on their own income profile in regards to how the increase in income tax payable on dividends is likely to affect our clients from 2016-17, if they decide to keep the same income profile going forward.

The effect of this tax hike is likely to be felt at 31 January 2018 when the self-assessment balancing payment for 2016/17 will be due for payment.

Depending on individual circumstances and future income needs, some clients may decide to stockpile a certain level of dividend income before the end of this current tax year ending 5 April 2016, in advance of the increase in the effective rate of tax payable on dividends. This will typically only be beneficial if a certain level of dividend income is already taxed at the current effective higher and additional rates of 25% and 30.56% respectively.

In summary, taking a higher salary is still not likely to be beneficial in tax terms under the proposed tax regime. The low salary with the balance of income requires being taken by dividend is still the cheapest option, however the overall Income Tax and National Insurance contributions savings will not be as great as they have been once the new rules are introduced.

Please feel free to discuss the effect of these changes with your usual contact at Tait Walker.

Summer Budget 2015 – tax changes


Our Tax Associate, Chris Hodgson shares his thoughts on the tax changes announced in yesterday’s Budget…

In the first majority Conservative Budget since November 1996, George Osborne set out his stall on the direction of travel for taxation and welfare over this Parliament. There are a large number of changes, many of which are inter-related.

The Tax Lock will mean that in addition to VAT, rates of Income Tax and National Insurance will not change during this Parliament. However, the amount of income that you have to earn before paying 40% tax is to increase by about £600 for 2016/17. On the other hand, the amount of NIC payable will increase and so the net effect is a saving of about £5 per month.

The introduction of the National Living Wage and the increase in personal allowance will increase the net pay for a low income family, but the reduction in tax credits will offset against that extra income.

This places a greater financial burden on employers who will be paying the National Living Wage. To try to help those companies the Employment Allowance, which subsidies the cost of employer’s NIC, is to increase by £1,000 per annum. In addition, the rate of corporation tax is to fall from 20% to 18% by the end of this Parliament.

The Chancellor mentioned several times that this is to be a One Nation government and there was further evidence of those with the broadest shoulders being asked to bear a large proportion of the financial pain. Pension tax relief for 45% of taxpayers is to be restricted, loan interest relief for buy to let landlords is to be limited and the additional nil rate band for Inheritance Tax will not benefit those with estates worth more than £2.7 million.

Families receiving tax credits who are already paid more than the proposed National Living Wage will also suffer from this Budget, as the loss of tax credits is likely to exceed any benefit from the increase in personal allowance.

Overall, this is a more balanced Budget than might have been expected and it gives an indication that the government may be trying to benefit the whole nation.

For further advice regarding the tax announcements in yesterday’s Budget, please contact Chris Hodgson on 0191 285 0321 or email


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