Spending review and Autumn Statement 2015

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In his Spending Review and Autumn Statement the Chancellor announced a range of tax and spending measures many of which have arisen further to consultation during this year and so there were no major surprises.

UK Residential Property

After the range of new measures proposed in June, the Chancellor has not announced any substantial amendments to the UK residential property changes proposed in the Chancellor’s Summer Budget. However, there are a few changes:

  • higher rates of stamp duty land tax (SDLT) will be levied on the purchase of additional residential property (above £40,000) such as buy to let or second homes; the higher rate will be 3% above the current SDLT rates;
  • the government will consult on the policy detail including whether an exemption for corporates and funds owning more than 15 properties is appropriate; and
  • the reliefs available from ATED and the higher rate of 15% SDLT will be extended to equity release schemes, property development activities and properties owned by employees from 1 April 2016.

There is also some clarification on the computations required for the new capital gains tax (CGT) for non UK residents disposing of UK residential property. In addition, from April 2019, the payment window of 30 days of the completion of sale of UK residential property will be extended to the sale of any UK property (except where PRR applies ) bringing UK residents within this regime and shortening the period for those known to HMRC such as non-resident landlords. This will inevitably cause some additional practical issues for those owning property or administering property structures to ensure that the correct amount of tax is paid on time.

Offshore evasion and tax avoidance/GAAR

The government continues to focus on combatting perceived tax avoidance and evasion. The Chancellor announced a new 60% penalty levied on the tax due under the General Anti Abuse Rule (GAAR), as well as some minor changes to the GAAR.

Further to the four consultation documents issued in July, the Chancellor has now confirmed a number of new measures to combat tax evasion including:

  • a new criminal offence that removes the need to prove intent,
  • increased civil penalties for offshore tax evaders,
  • new civil penalties for those who enable offshore tax evasion, including public naming of those who have enabled tax evasion and
  • it will become a criminal offence for corporates who fail to prevent their agents from criminally facilitating tax evasion.

The government also proposes to consult on an additional requirement for individuals to correct any past offshore non-compliance with new penalties for failing to do so.

Taxation of asset manager’s performance based rewards

Legislation will be introduced to determine when performance awards received by asset managers will be taxed as income or capital. It is proposed that an award will be subject to income tax unless the underlying fund undertakes long term investment activity. The draft legislation is expected to include definitions of what would be regarded as short term or long term which will be of critical importance to fund administrators, managers and promoters to understand the impact of these new changes to specific fund structures.

This follows the conclusion of the consultation on the topic, which detailed two potential approaches (being activities based approach or a holding period approach). Full details of the proposals can be found in the Consultation document.

Personal Tax

UK Non-Domiciled Individuals

For the first time in recent years, the announcements were uneventful for non-UK domiciled individuals, which will be welcomed by the local fiduciary sector. The Chancellor has announced that the government will consult on how to change the Business Investment Relief rules to encourage greater use of the relief to increase investment in UK businesses. These rules were introduced in April 2012 and broadly allow UK resident and non-UK domiciled individuals to invest their foreign income and gains in qualifying UK businesses without triggering a taxable remittance.

Deeds of Variation

Deeds of variation are a mechanism that enable people who inherit assets on someone’s death to agree to vary the way in which those assets are distributed. This is only possible if everyone who is affected agrees to the variation. Where a variation is possible, is carried out within two years of the death and some procedural requirements are satisfied, no tax charge arises and the new gifts are treated for IHT purposes as made by the deceased. The government announced a consultation on deeds of variation at the time of the March 2015 Budget. That consultation has now been completed and, as widely anticipated, the Chancellor has announced that no changes to the existing rules are to be introduced, but the position would be kept under review.

Other measures

Disguised remuneration

The focus on disguised remuneration continues with a statement that the government will take action against those who have used or continue to use disguised remuneration schemes.


Against the backdrop of the OECD/G20 BEPS project, the UK will release draft legislation on 9 December in respect of the agreed OECD recommendations on hybrid instruments (Action 2 of the BEPS plan) with the new law expected to apply from 1 January 2017. There were no further announcements in the autumn statement with regard to BEPS. The government had previously released a consultation document with respect to action 4 of the BEPS project (tax deductibility of corporate interest expense); responses to this consultation should be provided by 14 January 2016, and the government is expected to set out the direction for future interest limits as part of the Business Tax Roadmap, expected at Budget 2016.


There is no doubt that HMRC is responding to the increased focus on technology and will invest £1.3bn to transform HMRC into one of the most digitally advanced tax administrations in the world. The aim will be to bring the time of reporting and payment of tax closer together but also, one imagines, to facilitate better analysis of key tax information about UK taxpayers received both from UK tax payers themselves but also from global financial institutions under the new automatic information exchange regimes of FATCA and CRS.

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