Was this a typical pre-election 'give-away' budget?



No more annual tax returns? - Beware the geeks bearing gifts 

Moves to roll out digital tax accounts, pre-populated with information already held by HMRC, were foreshadowed in HMRC’s latest Digital Strategy, published in December 2014. The Budget has given us some more information, confirming that, by the end of the next Parliament, every small business and individual should have their own digital account. The intention of the new system is to allow taxpayers to have an overview of all their tax affairs, including PAYE and VAT where relevant, in one place. Accounts will be pre-populated with data already held by HMRC (for instance, PAYE information submitted by employers), and with new data from third parties. Ultimately, the intention is that small businesses will be able to link their accounting software to their personalised tax account, removing the need for the submission of an annual tax return.

So now businesses will be able to link there bookkeeping software with this new ‘Revenue Account’. The Revenue will be privy to every mistake and alteration you make. HMRC become an older male sibling at a stroke!!

More attempts to discourage working through Personal Service Companies (PSCs) and Umbrella Companies

Following on from the consultation exercise on the availability of travel and subsistence (T&S) relief under overarching contracts of employment the Government has now confirmed its intention to restrict T&S relief for workers engaged through an employment intermediary where supervision, direction and control (SDC) is exercised over the workers by the end user. This measure will therefore be focused not only on instances where over-arching contracts of employment are used, but also other working arrangements involving the use of employment intermediaries. The measures are due to take effect from April 2016, following a consultation to be held this summer, which is intended to confirm the underlying details and scope of the T&S restrictions. 

Assistance for first time buyers.

The Help to Buy ISA is designed to assist individuals who are saving to buy their first home. It will be available, through banks and building societies to individuals (minimum age of 16) who are first time home buyers. Each person can have one Help to Buy ISA (rather than one per house purchased) so those buying together can each have a separate Help to Buy ISA with its own limits and qualification for the Government bonus. Whilst an initial maximum deposit of £1,000 can be saved when the Help to Buy ISA is first opened, the maximum monthly saving permitted will be £200, with the Government contributing 25% of the amount saved. The maximum Government contribution will be £3,000 (in relation to £12,000 of savings), with such contribution being calculated and paid when the Help to Buy ISA account holder buys their first home (subject to a minimum Government contribution of £400). It appears that the Help to Buy ISA will count as the single cash ISA to which an individual can contribute in a tax year under the normal ISA rules. The Help to Buy ISAs can be opened within a four year period after the scheme formally opens (expected to be Autumn 2015).

Some rules regarding ISAs have been relaxed

The Government has announced its intention to relax certain, of the currently strict, rules in relation to withdrawals of funds from ISAs. Currently, once funds have been withdrawn from an ISA, they still count as having been used as part of an individual’s ISA subscription limit. Therefore it has not been possible to make withdrawals from an ISA and later pay these back into the ISA in the same tax year unless under the ISA subscription limit for the year. The Government announced in the Budget that regulations will be introduced in Autumn 2015, following consultation on technical detail, to enable ISA savers to withdraw and replace money from their cash ISA without it counting towards their annual ISA subscription limit for the year in which they pay the funds back in. In addition, the Government announced further relaxations of the permitted investments for ISAs and Child Trust Funds. The flexibility in relation to ISA withdrawals will be welcomed by many savers.

The Government wants to extend the new pension freedoms

The Government has launched a consultation on allowing those who have already bought an annuity to benefit from the new pension freedoms. From April 2016, the government intends to allow annuity holders to sell the income they receive from their annuity in order to access the funds more flexibly. The annuity holder would be able to access its value if they can find a willing third-party buyer. Making a decision whether to sell, and at what price, will be very difficult for consumers. Not only is it a complex financial transaction, but the decision will also impact an individual’s tax position and potentially the system for benefits and long-term care. The Government is considering:

■requiring individuals to take independent financial advice (this could be in all cases or above a given threshold only)

■providing free and impartial tailored guidance by extending the scope of Pension Wise (the new at -retirement guidance to help members of defined contribution schemes understand the new pension freedoms)

■requiring annuity providers to give warnings of the risks and factors consumers should be considering when making this decision

Tax Avoidance

The Chancellor announced that the Government will introduce further measures in a future Finance Bill. The Government began a consultation in January on tougher measures for ‘serial avoiders’ – those who use tax avoidance schemes that habitually fail year after year. The Chancellor has now announced that these measures will be pursued. The measures will not only introduce additional administrative and financial measures for ‘serial avoiders’–the intention is also to publish the names of the taxpayers concerned. Whether the plans to tackle serial avoidance can be made to work properly in practice remains to be seen.