Monday, 9 January 2017

Welcome to the Exceed monthly newsletter.

Help to Buy sales update
Big changes for non-doms
New measures to combat phishing emails
Finance Bill 2017 – draft legislation
Government to waive VAT on Jo Cox charity single
Basic bank accounts update
Date announced for Spring Budget 2017
Help to Buy sales update Income Tax

The latest statistics on the uptake of the Government’s flagship Help to Buy schemes were published on 15 December 2016. The figures show that over 220,000 homes have been bought since the schemes were first launched in October 2013. The portfolio of Help to Buy schemes include: ISA, Shared Ownership, Mortgage Guarantee, Equity Loan and London Help to Buy. The average house price across the schemes is £191,000.

The average house price to income multiple under the mortgage guarantee scheme is capped at a 4.5x ratio to ensure responsible lending. The London Help to Buy scheme was launched in February 2016 and is helping London residents to buy a new home with a 5% deposit and a mortgage as low as 55% for first time buyers as well as homeowners looking to move to a newly built home with a price tag of up to £600,000. The London Help to Buy scheme has been used by 1,500 buyers in the first 9 months since the scheme was launched.

The Help to Buy: ISA scheme launched in December 2015. The scheme allows savers to claim a government bonus of 25% on monthly savings of up to £200 on savings towards their first home. The bonus translates to an extra £50 added to every £200 saved up to a maximum governmental contribution of £3,000 on £12,000 worth of savings.

The Chancellor of the Exchequer, Philip Hammond, said:

'Our Help to Buy schemes are helping hundreds of thousands of people, especially first time buyers, achieve home ownership. We are continuing the popular Equity Loan and ISA schemes to ensure people can access support when buying or saving for a property. We are determined to help make home ownership a reality for hard working people.'

As previously announced, the Mortgage Guarantee Scheme ended on 31 December 2016 as a wide range of 95% mortgage products are now available from commercial lenders.

Big changes for non-doms Overseas personal tax issues

In July 2015, the then Chancellor, George Osborne, presented a special Summer Budget, his first without coalition partners.

However, one of the important measures announced at that time was the abolition of non-domicile status. The government first declared its intention to legislate such that, from April 2017, any person who has been resident in the UK for more than 15 of the previous 20 years will be deemed to be domiciled in the UK for tax purposes.

Additionally, from April 2017, individuals who are born in the UK, to UK domiciled parents, will no longer be able to claim non-domiciled status whilst they are resident in the UK. This measure is intended to prevent those with the most significant links to the UK from returning here from abroad and claiming non-dom status. This will affect a lot of non-doms but the government has been clear that this measure will be implemented as originally set-out.

There have also been many calls to change or cancel these plans, especially following the Brexit vote. However, the government has stood firm and these measures will be implemented. It is also intended to ensure that from April 2017, Inheritance Tax will be chargeable on UK residential properties owned by non-doms through overseas structures. Currently some non-doms are not liable to pay Inheritance Tax on UK residential property which is held indirectly through overseas vehicles such as companies and trusts.

HM Treasury has now published a further document which responds to the earlier consultations and sets out the final package of reforms. These reforms include the introduction of a number of transitional measures to assist non-doms to adjust to the new rules. A package of arrangements will be introduced to help non-doms adjust to the new regime, in respect of the rebasing of foreign assets, cleansing of mixed funds and provisions for offshore trusts. There will also be changes to make the Business Investment Relief scheme more usable. Some of these changes will be legislated for in Finance Act 2017 which was published earlier this week. The Bill will be effective as of 6 April 2017. There remain some changes where we await the publication of draft legislation.

If you are concerned by any of the changes outlined above, please contact us for further information.

New measures to combat phishing emails General

HMRC has reported that they have reached a milestone in helping to reduce the estimated 500 million phishing emails that are sent to taxpayers every year. HMRC has implemented new controls based on domain-based message authentication, reporting and conformance (DMARC). The security process works by determining which email servers are allowed to send emails on behalf of the organisation.

A lot of the fraudsters sending these emails have been able to make HMRC phishing emails look more authentic by making emails appear as if they have come from a genuine HMRC domain, most commonly @HMRC.gov.uk. Using the DMARC controls, HMRC and email service providers are able to identify fraudulent emails purporting to be from genuine HMRC domains and prevent their delivery to taxpayers.

HMRC’s Head of Cyber Security, Ed Tucker, said:

'Phishing emails are a major focus for our Cyber Security Team. They’re more than just unwanted messages; they are a means by which criminals look to exploit members of the public and gain access to their personal and financial data. This in turn can lead to fraud and identity theft.'

HMRC has managed to reduce phishing emails by 300 million this year through spearheading the use of DMARC. Whilst this does not mean an end to HMRC-based phishing, taxpayers should notice less of these types of emails and those that do get through the net might not look as legitimate.

Finance Bill 2017 – draft legislation General

The Finance Bill 2017 draft legislation was published on 5 December 2016. The Bill contains the legislation for many of the tax measures that have been announced by the government. The Bill is open for comment until 1 February 2017 with the final details being confirmed in the spring Budget 2017.

The majority of the measures in the Bill were announced as part of the Autumn Statement on 23 November 2016 as well as changes announced at Budget 2016 which have not already been enacted. The Bill is likely to receive Royal Assent in the summer of 2017 with most measures taking retrospective effect from the start of the new tax year on 6 April 2017.

The March 2017 Budget will be the last to be held during springtime with a second Budget taking place next year in autumn 2017. The Budget cycle will continue from autumn 2018 and beyond. There will be some transitional changes as the new timetable is introduced.

From April 2017, the personal tax allowance is due to increase from the present £11,000 to £11,500. From the same date, the amount you can earn at the basic rate of tax will rise from £43,000 to £45,000. The Chancellor also committed to increasing the basic personal allowance to £12,500, and the higher rate tax threshold to £50,000, by 2020-21.

Other measures include the retention of the starting rate of savings Income Tax band at its current level of £5,000 for 2017-18, indexing the personal allowance in line with the Consumer Price Index once the £12,500 figure has been reached and increases to the ISA, Junior ISA and Child Trust Fund subscription.

There will also be changes to business tax, non-domicile rules, National Insurance thresholds alignment from April 2017 as well as the abolition of Class 2 NICs from April 2018.

Government to waive VAT on Jo Cox charity single General

The Chancellor, Philip Hammond, has announced that the government will donate the VAT on sales of the Christmas single in memory of the late MP Jo Cox. All proceeds from the sale of the single will go to the Jo Cox Foundation which supports a range of charities, including the Royal Voluntary Service and White Helmets.

The special recording of The Rolling Stones’ hit 'You Can’t Always Get What You Want' features cross party MPs, musicians together with members of parliamentary rock group MP4 and the Royal Opera House Thurrock Community Chorus. The Chancellor commented that:

'Jo Cox dedicated so much of her life to helping people less fortunate than herself and the charity named in her honour is carrying on that excellent work. It is only right that we do what we can to support that work and I am pleased to confirm that every single penny of sales from this single will go towards the good causes the Jo Cox Foundation supports.'

This announcement follows confirmation that the government will also waive the VAT equivalent on the sales of this year’s X-Factor Christmas Charity single ‘When Christmas Comes Around’ by Matt Terry, the winner of the reality show.

Basic bank accounts update General

Fee-free basic bank accounts were launched on 1 January 2016. Basic bank accounts are for people who do not have a bank account, are ineligible for a standard current account or who can’t use their existing account due to financial difficulty. These accounts are primarily of interest to those with poor credit ratings who may be unable to pass the credit checks for standard bank accounts.

Basic bank accounts were available prior to 1 January 2016, however, the new accounts meet enhanced standards agreed by the government and industry in late 2014. There are currently 8 million basic bank accounts in the UK and over half of these meet the 2014 agreement standards. Since the 2014 agreement came into force on January 1 2016, nearly half a million basic bank accounts have been opened in the UK.

The basic bank accounts do not offer overdrafts or cheque books, but they are similar to existing bank accounts in many ways and will be suitable for day-to-day transactions. The accounts also provide for counter access on the same terms as other bank customers and also allow for access to ATMs and online services.

Economic Secretary, Simon Kirby said:

'Ensuring consumers have access to the financial services they need is a vital part of our plan to build an economy that works for everyone. That is why I am delighted nearly half a million people have opened fee-free basic bank accounts since January. There is still more to be done and I am determined to work with the industry to boost financial inclusion and make sure people have the resources they need to manage their finances.'

Date announced for Spring Budget 2017 General

Hot on the heels of the recent Autumn Statement, the Chancellor has announced that the Spring Budget will be held on Wednesday, 8 March 2017.

This will be the last Spring Budget to take place following the government’s decision to switch to an Autumn Budget and a Spring Statement. The Spring Budget is also very likely to be the last Budget to take place before the UK begins the formal Brexit negotiation process. The Prime Minister has said that she expects this process to be started by the end of March 2017.

In order to commence the new schedule we will also have the unusual scenario of two Budget dates in 2017 with a second Budget taking place in Autumn 2017. The Budget cycle will then continue annually from autumn 2018. Each spring, also starting in 2018 there will be a Spring Statement. The government will retain the option to make changes to fiscal policy at the Spring Statement if the economic circumstances require it.

Details of all the Budget announcements will be made on a special section of the GOV.UK website which will be updated following completion of the Chancellor’s speech next March.


Best wishes,

The Exceed Team
In preparing and maintaining this newsletter every effort has been made to ensure the content is up to date and accurate. However, laws and regulations change continually and unintentional errors can occur and the information may be neither up to date or accurate. Exceed CA Limited makes no representation or warranty (including liability towards third parties), express or implied, as to the accuracy, reliability or completeness of the information published in this newsletter. The articles shared with you in this email are intended to inform rather than advise. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.