The Autumn Statement 2015
Chancellor George Osborne announced today the Autumn Statement and the Spending Review, outlining the current state of the UK economy and the Government’s spending plan for the next four years.
How will the Autumn Statement affect your sector?
Many of the predicted changes relating to individuals did not materialise in today’s Autumn Statement. For example, changes to inheritance tax and capital gains tax reliefs were widely mooted but were not announced.
Deeds of variation also remain unaffected, although it has been stated that they will be kept under review. Deeds of variation enable beneficiaries of a deceased’s estate to alter the distribution of the estate, sometimes generating inheritance tax savings. The continued ability to use deeds of variation is good news for the public, as changes could have amounted to a tax on people who haven’t taken advice on succession planning.
Whilst there was no more news on “non-doms” today, draft legislation is expected on some aspects of the “non-dom” tax reforms which were announced in the summer, on 9 December. For example we should soon have further information on the treatment from 6 April 2017 of former UK domiciliaries who are returning to the UK. Further announcements on “non-doms” are due next year.
The chancellor did announce that from 2019, the Government will require capital gains tax to be paid within 30 days of completion on residential properties. While the pretext for this is likely to be compliance with European law, it also has the useful side effect of accelerating tax receipts.
The addition of a 60% tax penalty to the General Anti-Abuse Rule (GAAR) on top of the tax payable, while not a surprise (it was first mooted in a July consultation paper), is a clear attempt to further discourage tax arrangements which might be deemed unreasonable.
Finally, the introduction of a 3% SDLT surcharge on the purchase of second and subsequent residential properties from 1 April 2016 was not foreseen. This is the latest in a number of tax changes targeted at UK residential property, which is clearly a focus for the Government at present.
The Chancellor made a number of welcome announcements to help the social care sector. These have the potential to take the sting out of what has become a funding crisis, with many operators dependent on public sector funding likely to cut capacity or close as they face staffing shortages and costs increases due to the National Living wage which they cannot pass on to local authorities.
The ability for councils to levy a precept of up to 2% on council tax bills is consistent with the Government’s localism agenda and could release up to £2b in extra funds. While higher bills are not welcome this move is against the background of council tax freezes for a number of years in many areas – but clearly the danger is that councils do not act consistently on this (or at all). There is also a welcome increase in the Better Care fund that promotes better integration between the NHS and the social care sector. Lastly, the Government is also making available £400m for new care homes to be built, though how this will be delivered when most homes are built by the private sector is unclear.
Real Estate & Construction
The Spending Review highlights the Government’s continued commitment to increasing housing delivery. There is a strong emphasis on affordable home ownership with funding for starter homes and support for help to buy shared ownership, homes that “allow a tenant to save for a deposit while they rent” and specialist homes for the elderly and people with disabilities. Developers will welcome the government’s intention to remove constraints that prevent private sector organisations from participating and bidding for funding.
The green belt is an emotive issue and, before today, the government has been firmly in support of its protection. It has now announced that it will support the regeneration of previously developed brownfield sites in the green belt by allowing them to be developed in the same way as other brownfield land, providing the regeneration contributes to starter homes and subject to local consultation. The redevelopment of such brownfield sites already has some support in national policy and it remains to be seen how far the government will go with their proposal. Many are calling for a wholesale review of the purpose of the green belt in light of the need for housing. For some, the government’s proposal might at least be a step in the right direction.
News & Insights
Kiadis Pharma secures €20 million debt financing facility from Kreos Capital
Charles Russell Speechlys advises Kreos Capital V Ltd on additional growth capital investment of €20 million in Kiadis Pharma NV
Charles Russell Speechlys advises Kreos Capital on €20 million growth capital facility in Medtech company
Charles Russell Speechlys have advised Kreos Capital on its additional growth capital facility of €20 million in Cellnovo Limited
Infra. Law - Autumn 2018
Welcome to the latest edition of Infra.Law bringing you insight into issues facing the domestic and international infrastructure sector.