Tax efficient digest – 24 November 2016
Britons paying unnecessary CGT bills, crowdfunding, Blair shuts down secretive advisory firm and more
The new Chancellor, Philip Hammond, stood up a little after 12.30 and calmly delivered the final Autumn Statement to a tense UK in the throes of Brexit. Mr Hammond said the statement, his first major Commons event as Chancellor, came exactly five months after a Brexit vote which “will change the course of Britain’s history”, making it “more urgent than ever” to tackle long-term economic weaknesses.
As expected, top of the agenda was how the UK will remain a global player in a post-Brexit world. Mr Hammond said borrowing would be up this year and next year, but the UK economy was ‘resilient’. The key theme was protecting and building GDP for the future by prioritising “additional high-value investment” on infrastructure and technology, which would be funded by additional borrowing, and injecting an additional £400 million into VC funds through the British Business Bank.
- Personal Allowance to rise from £11,000 to £11,500 from 6 April 2017 and a commitment by the end of this parliament to raise it to £12,500.
- The threshold for the higher rate tax to go from £43,000 to £45,000 from 6 April 2017 and a commitment by the end of this parliament to raise it to £50,000.
- Employee perks like gym memberships and mobile phone deals will be abolished or cost more from 6 April 2017.
- A change to NICs was “quietly” released that will see people earning more than £43,000 pay an extra £200 a year.
- Corporation tax will, in the future, decrease to 17% as previously planned, rather than the mooted cut to 15%. It will be 19% from April 2017.
- The announcement of £1.4 billion of funding for 40,000 new homes and a large-scale pilot to give the right to buy to housing association tenants.
- Increasing the National Living Wage to £7.50 an hour from April 2017.
- Non-doms will benefit from a relaxation of the rules on business investment relief allowing non-doms to bring money into the UK more easily from next April.
- Cancelling the fuel duty increase for the seventh year running.
Tax advantaged venture capital schemes
There was little in the way of any new major announcements, which is to be welcomed, but a few measures were set out in the Finance Bill as below:
- A consultation will be carried out into options to streamline and prioritise the advance assurance (AA) service, this is welcome as the process is unacceptably slow currently taking up to 8 weeks for AA to be granted in a lot of cases.
- Clarification on the rules for share conversion rights for shares issued on or after 5 December.
- Provision for additional flexibility for follow-on investments made by Venture Capital Trusts (VCTs) in companies with certain group structures, to align with EIS provisions, for investments made on or after 6 April 2017.
- Introduction of a power to enable VCT regulations to be made in relation to certain share for share exchanges to provide greater certainty to VCTs, to take effect from Royal Assent.
- The government has also announced it will not take forward replacement capital (using EIS/VCT money to buy second-hand shares) for the time being, but will review the case over the longer term.
The big announcement that caught the eye was to the boost to the Social Investment Tax Relief (SITR), which investors in community and other “socially responsible” investment bonds and similar schemes have been using. From 6 April 2017, the amount of investment social enterprises aged up to seven years old can raise through SITR will increase to £1.5m, which should propel the interest in SITR to levels seen in EIS, SEIS and VCTs.
Our guide to the 2016 Autumn Statement
Download a copy of Enterprise’s comprehensive commentary on the main announcements in the Autumn Statement.
Our summary provides an overview of the key taxation, business and financial measures announced in the Autumn Statement which could affect you and your business.
For more information on any of the topics covered in the guide, and how they may affect the tax-efficient investing market, please call us on 020 7843 0471.
Christian Elmes, Partner
Christian Elmes trained at PwC and qualified as a chartered accountant in 1999, before moving to Morgan Stanley (2000-2002) as Associate in the Investment Banking Division (IBD).
He was appointed Director of Finance, Teather & Greenwood Investment Management in 2002 and moved with the Tax Efficient Solutions team to Smith & Williamson in 2004, becoming Deputy head of the department. He left to co-found Enterprise in 2011.
Over the last ten years, Christian has been responsible for developing a number of tax efficient products, particularly Enterprise Investment Schemes (EIS). He is able to lead on tax efficient product development from inception through to completion, because of his financial and tax background and commercial experience.
Christian is competent across a broad range of sectors including, leisure and hospitality, media, property and renewable energy.
Christian is a non-executive board member to a number of leisure and hospitality companies, Casper & Cole Ltd, Wright & Bell Ltd, Ruth & Robinson Ltd, Camm & Hooper Ltd and Darwin & Wallace Ltd.