COLUMN by Alan Tringham of Price Bailey Accountants and Business Advisers on the government's autumn budget
PUBLISHED: 13:35 03 December 2015 | UPDATED: 13:35 03 December 2015
Chancellor George Osborne's third economic statement of 2015 (the fourth within 365 days) lacked the big surprises and headline grabbing announcements we've come to expect from these occasions.
However, there were a number of noteworthy measures aimed at landlords and a number of VAT changes which largely escaped the media spotlight.
One of the significant measures announced by the Chancellor was an additional three per cent rate on current Stamp Duty Land Tax rates to apply not just on buy-to-let properties but all second homes, to be introduced from April 1 2016. There will be consultation on an exemption for corporates or funds owning 15 or more residential properties.
The last few Autumn Statements and budgets have been fairly uneventful from a VAT perspective after the ‘pasty’ VAT debacle and the removal of zero rating from the substantial reconstruction of protected buildings in the 2012 budget.
However, VAT played a significant role in this year’s speech. First of all, the Chancellor’s U-turn regarding tax credit cuts was made possible largely because of a change in the model that the Office of Budget Responsibility uses to predict the government’s VAT receipts.
The Chancellor also announced that sixth form colleges in England will be given the opportunity to become academies, allowing them to recover their non-business VAT costs.
The VAT change which did hit the headlines was around the widespread demand for the removal of VAT from sanitary products. The Chancellor correctly confirmed that under EU rules, the UK is prevented from introducing any new zero rating and thus his hands are tied. However, the reduced rate of 5% already applies to the supply of sanitary products and the Chancellor has agreed to set up an annual fund equivalent to the yearly value of the VAT on such products. The fund will be donated to women’s charities.
A full breakdown can be found in our Autumn Statement report, and if you’d like more information on how it affects the structure, strategy and tax position of your business or residential property portfolio please contact a member of our tax team.