1. The government will continue to clamp down on tax avoidance, planning and evasion, as well as increasing resources for HM Revenue and Customs (HMRC) so they can make sure people pay the tax that are due. This includes:
- extra investment between now and 2020 for HMRC’s work on evasion and non-compliance
- tripling the number of criminal investigations HMRC can undertake into complex tax crime, concentrating on wealthy individuals and companies
- allowing HMRC to access more data to identify businesses that aren’t declaring or paying tax
- introducing a ‘general anti-abuse rule’ penalty and tough new measures for serial avoiders, including publishing the names of people who repeatedly use failed tax avoidance schemes
2. Introducing a new National Living Wage of over £9 an hour by 2020
From April 2016, a new National Living Wage of £7.20 an hour for the over 25s will be introduced. This will rise to over £9 an hour by 2020.
3. The Employment Allowance will increase by a further £1,000 to £3,000
Businesses will have their employer National Insurance bill cut by another £1,000 from April 2016, as the Employment Allowance rises from £2,000 to £3,000. The Employment Allowance gives businesses and charities a cut in the employer National Insurance they pay.
This means, next year, businesses will be able to employ 4 people full time on the National Living Wage and pay no National Insurance at all.
4. Reforming dividend tax
The dividend tax credit (which reduces the amount of tax paid on income from shares) will be replaced by a new £5,000 tax-free dividend allowance for all taxpayers from April 2016. Tax rates on dividend income will be increased.
This simpler system will mean that only those with significant dividend income will pay more tax. Investors with modest income from shares will see either a tax cut or no change in the amount of tax they owe.
5. Employment intermediaries and tax relief for travel and subsistence
As announced within the March Budget 2015, the government has published a consultation document, available at the ARC website, alongside the Summer Budget on detailed proposals to restrict tax relief for travel and subsistence for workers engaged through an employment intermediary, such as an umbrella company or a personal service company. The changes will take effect from 6 April 2016 – (Finance Bill 2016)
6. IR35 reform
The government will engage with stakeholders this year on how to improve the effectiveness of existing intermediaries legislation (‘IR35’), which is designed to protect against disguised employment. A discussion document will be published after the Summer Budget 2015.