Autumn Statement Hopes for Charities, Inheritance Tax and Pensions
The Chancellor’s Autumn Statement is due on November 25, we have outlined what we would like to see included this year.
Nigel Shaw (specialising in private clients, wealth management and the charities and not-for-profit sector) commenting on the upcoming Autumn Statement announcement, said: “Through my extensive work with charity clients, a large concern is the £300,000 limit placed on social investment tax relief which means that private sector funders cannot always use it.
“There are many charitable projects looking for finance which exceed the limit. The Chancellor needs to increase this limit or risk charities and community projects giving up on this new tax relief before it even gets started.
“There is also a lot of speculation about inheritance tax, and it is a topic that I would expect the Chancellor to address. The changes due to inheritance tax thresholds in April 2017 remain unduly complicated with the small print causing many advisors headaches.
“Additional inheritance tax reliefs aimed at property owners in particular should be introduced immediately, and the government should avoid being needlessly prescriptive about who is eligible for such reliefs.
“Currently, the UK private pensions system is heavily skewed towards higher earners getting the most relief. I expect that the Autumn Statement will announce a move to a flat rate system in April 2016 which would give high earners plenty of time to ‘top-up’ their reliefs and even the playing field for those in a lower income bracket.”
Nick Scull, specialising in tax said: “Recently residential landlords have been a key focus for the government, and seem to be viewed as a lucrative sector to raise additional tax revenue. The proposed restriction on tax relief for interest costs will have a huge impact when introduced in 2017, with HMRC’s own calculations putting the tax rate on rental profits at 85 per cent in a typical example.
This seems to be aimed at the problems of the private rented sector by seeking to drive out the small landlord, but it will seem grossly unfair to ‘reluctant landlords’ – such as those who have had to let out a former home – and to many landlords outside of London. The result of this will be to push private landlords to operate through companies. While a complete rethink of this policy seems unlikely, I would hope to see the Autumn Statement include some measures to ease the transition to operating through a company.
“Given the spiralling costs associated with ‘entrepreneurs relief’ – which went over budget by £2bn – I expect the Chancellor will address this in his Statement. Many commentators wrongly presumed that this was coming in the June Budget, but we could well see it hit hard this time around.
“In particular reforms may be introduced to remove the relief from around two-thirds of cases that qualify under current rules, bringing the cost back under control. This is certainly something that I would advise owner-managed businesses to be planning for as they cannot expect to continue to be eligible for the lower 10 per cent tax rate forever and may well end up paying the full 28 per cent rate.”
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