UK Budget 2016 - miscellaneous announcements

Mar 29, 2016

This Budget announces the biggest business energy tax reforms since the taxes were introduced; for more information, see the Budget documents. Other areas of interest, including changes to the patent box regime, are outlined. 

 

  • 100 percent first year allowance for businesses purchasing low emission cars are to be extended for a further 3 years to April 2021
  • The main rate threshold for capital allowances for business cars is reduced from 110 grams/kilometre of CO2 and the FYA threshold to 50 grams/kilometre of CO2 from April 2018
  • Company car tax will continued to be based on CO2 emissions of cars, and a consultation will be launched on reforming the lower CO2 bands for ultra-low emission vehicles to refocus incentives on the cleanest cars beyond 2020-21
  • The government will amend the simplified expenses regime introduced in Finance Act 2013 to ensure that partnerships can fully access the provisions in respect of the use of a home and where business premises are also a home (Finance Bill 2016)
  • A charge to inheritance tax will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. This will be backdated to apply to deaths on or after 6 April 2011 (Finance Bill 2016)
  • The inheritance tax residence nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 where assets are passed on death to direct descendants
  • The reliefs available from the annual tax on enveloped dwellings and the 15 percent higher rate of SDLT will be extended to equity release schemes (home reversion plans), property development activities and properties occupied by employees from 1 April 2016 (Finance Bill 2016)
  • From 6 April 2017, the fuel benefit charge multiplier for both cars and vans will increase by RPI. From the same date the main van benefit charge (VBC) will increase by RPI
  • Vaccine research relief for R&D tax relief will end when its State aid approval runs out on 31 March 2017
  • Legislation for the SME R&D tax credit scheme will be amended to ensure that it continues to work as intended after the previous large company scheme ends on 31 March 2016 (Finance Bill 2016)
  • The government will launch a consultation on how to expand support that can be given to grassroots sport through the corporation tax system.
  • The changes to the Patent Box regime to comply with the OECD’s modified nexus approach will take effect from 1 July 2016
  • The government will consult on whether to introduce secondary adjustment rules into the UK’s transfer pricing legislation.
  • Legislation will be introduced to implement the revisions to the OECD Transfer Pricing Guidelines that were agreed as part of the OECD BEPS project.
  • The renewals allowance which provides traders and property businesses with tax relief for the cost of replacing tools will be repealed (Finance Bill 2016)
  • Legislation will be implemented to ensure that trading receipts in non-monetary form are brought into account for tax purposes at their full value (Finance Bill 2016)
  • The government will launch a consultation on how partnerships calculate their tax liabilities. This consultation will include a number of areas where the taxation of partnerships could be seen as uncertain, including an issue highlighted by the Office of Tax Simplification’s partnerships review
  • The current tax rules for part surrenders and part assignments of life insurance policies to will be changed to prevent excessive tax charges arising on these products. The government will consult later this year on alternatives to the current rules with a view to legislating in Finance Bill 2017
  • The government is considering limiting the range of benefits that attract income tax and NICs advantages when they are provided as part of salary sacrifice schemes.
  • A package of measures to further simplify the tax administration of employee benefits and expenses will be introduced. This will include;
  • extending the voluntary payrolling framework to allow employers to account for tax on non‑cash vouchers and credit tokens in real time from April 2017;
  • consulting on proposals to simplify the process for applying for and agreeing PAYE settlement agreements;
  • consulting on proposals to align the dates by which an employee has to make a payment to their employer in return for a benefit-in-kind they receive to ‘make good’
  • legislating to ensure that if there is a specific statutory provision for calculating the tax charge on a benefit-in-kind this must be used (Finance Bill 2016 and Finance Bill 2017);
  • introducing a statutory exemption from income tax for qualifying trivial benefits-in-kind costing £50 or less. The exemption will remove the charge to income tax or Class 1A National Insurance contributions (NICs) with effect from 6 April 2016. A corresponding disregard for Class 1 NICs will take effect later in the year. (Finance Bill 2016);
  • no changes will be made to travel and subsistence expenses.

Is the website not looking right / working right for you? You might need a browser update. Browser support