UK 2014 Autumn Statement
The UK Chancellor of the Exchequer, George Osborne, gave his Autumn Statement, the last before next year’s general election. We concentrate on considering the principal announcements affecting Stamp Duty Land Tax, increase in ATED rates, remittance basis rates for resident non-doms and anti-avoidance penalties.
Stamp Duty Land Tax
The major announcement is an overhaul of the current regime of Stamp Duty Land Tax (SDLT) levied on residential properties. The present flat rate system will be abolished and replaced by a new system of progressive tax bands.
Starting with a 0% rate for properties up to £125,000, with tax rates increasing for that part of the property in each band, rising to a top rate of 12%.
|
£0 to £125,000 |
0% |
|
£125,001 - £250,000 |
2% |
|
£250,001 - £925,000 |
5% |
|
£925,001 - £1,500,00 |
10% |
|
£1,500,001 and above |
12% |
The new rates are applicable from 4 December 2014, but transitional provisions provide that if contracts were exchanged before 4 December an election can be made whether to pay SDLT under the old or the new rules.
Annual Tax on Enveloped Dwellings
In conjunction with changes to SDLT the Chancellor announced increases to the annual tax on enveloped dwellings (ATED), applicable to residential property held through certain corporate vehicles.
With effect from 1 April 2015 the ATED rates will increase by 50% plus inflation to the following levels:
|
Property Value |
ATED Charge 2015/16 |
|
From £2,000,000 to £5,000,000 |
£23,350 |
|
£5,000,001 to £10,000,000 |
£54,450 |
|
£10,000,001 to £20,000,000 |
£109,090 |
|
£20,000,001 and above |
£218,200 |
This change comes on top of the announcement earlier this month of the imposition on UK non-residents of a capital gains tax charge on the disposal of UK residential property (see our news bulletin ‘UK Non-Residents: Capital Gains Tax and Main Resident Exemption’ on our Rosemont News page http://www.rosemont-int.com/news/11-12-2014-uk-non-residents-capital-gains-tax-and-main-resident-exemption/).
Remittance Basis
For UK resident non-domiciled individuals there is bad news as well, with an increase to the annual charge payable by long term UK residents who qualify under the remittance basis of taxation.
For resident non-doms who have been UK resident for at least 12 of the last 14 tax years the annual charge will increase by £10,000 to £60,000. For those individuals resident for at least 17 of the last 20 tax years the charge will rise to £90,000 a year. The changes will take effect from April 2015.
The remittance basis is an opt in or opt out tax, so giving individuals the opportunity each year to opt in should their tax on offshore income and gains be higher than the remittance basis charge. This might change in the future, as a consultation process has been announced on whether the option should be limited to remain in force for a maximum of three years.
Anti-Avoidance
The Chancellor also announced further penalties against individuals who evade tax through placing funds offshore. The civil penalties to be introduced will take effect from April 2016 and include a new aggravated penalty of up to a further 50% if hidden funds are moved between offshore jurisdictions with the intention of evading tax international transparency agreements.
Currently, inheritance tax is outside the penalty net, however, this will now change with IHT evasion falling within the scope of the penalties.