Spending Review and Autumn Statement Live 2015 by Chancellor of the Exchequer George Osborne's Housing property StampDuty
In the United Kingdom, the Autumn Statement, at times the Summer Statement (1993–1996) and the Pre-Budget Report (1997–2009), is one of the two statements HM Treasury makes each year to Parliament upon publication of economic forecasts, the other being the annual Budget. The duty to publish twice annual economic forecasts was created by the Industry Act 1975, with the first such publication occurring in December 1976. The first Autumn Statement combined the announcement of this publication with any announced changes to national insurance contributions and the Government's announcement of its spending plans (and publication of the Red Book), both of which were also made at approximately the same time in the parliamentary year.
From April 2019, they will have to pay any CGT due within 30 days of selling a property, rather than waiting till the end of the tax year, as at present.
Landlords are already due to get a lower rate of tax relief on mortgage payments.
In his summer Budget, the chancellor said that landlords would only receive the basic rate of tax relief - 20% - on mortgage payments, a change being phased in from 2017.
Responding to the latest changes, Richard Lambert, chief executive of the National Landlords Association said: "The chancellor's political intention is crystal clear; he wants to choke off future investment in private properties to rent.
"If it's the chancellor's intention to completely eradicate buy-to-let in the UK then it's a mystery to us why he doesn't just come out and say so".
Up to £60m of the money raised from the stamp duty surcharge will go to help home-buyers in England in places where holiday homes have forced up local prices. [see below for more detail ]
Between 1999-00 and 2010-11, spending on Housing Benefit increased by 46% in real terms, reaching £21.4 billion. 46 The government has already announced significant changes to Housing Benefit at Summer Budget. This Spending Review and Autumn Statement takes further steps to ensure fairness between those receiving Housing Benefit and those paying for the system.
The government will:cap the amount of rent that Housing Benefit will cover in the social sector to the relevant Local Housing Allowance, which is the rate paid to private renters on Housing Benefit. This will include the Shared Accommodation Rate for single claimants under 35 who do not have dependent children. This reform will mean that Housing Benefit will no longer fully subsidise families to live in social houses that many working families cannot afford, and will better align the rules in the private and social rented sectors. It will also ensure that Housing Benefit costs are better controlled and will help prevent social landlords from charging inflated rent for their properties. This will apply to tenancies signed after 1 April 2016, with Housing Benefit entitlement changing from 1 April 2018 onwards limit Housing Benefit and Pension Credit payments to 4 weeks for claimants who are outside Great Britain, from April 2016.
At present, Housing Benefit recipients can go abroad for up to 13 weeks while continuing to receive Housing Benefit. The benefit system should not subsidise those on benefits to go abroad for extended periods: this reform will ensure the benefit system is not paying the rent of people who go abroad for more than 4 weeks at a time
Additional Discretionary Housing Payment funding will be made available to local authorities to protect the most vulnerable including those in supported accommodation.
As a result of all these reforms, Britain is moving towards a higher wage, lower tax, lower welfare society. Families will have longer to adjust, and £12 billion a year of welfare savings will be achieved by 2019-20.Lower energy bills
As well as higher wages and pensions, and lower taxes, the government is implementing a package of measures to reduce the projected cost of green policies on the average annual household energy bill by £30 from 2017. The bulk of these savings will come from reforms to the current Energy Company Obligation (ECO) scheme. This will be replaced from April 2017 with a new cheaper domestic energy efficiency supplier obligation which will run for 5 years. The new scheme will upgrade the energy efficiency of over 200,000 homes per year, saving those homes up to £300 off their annual energy bill, tackling the root cause of fuel poverty and delivering on the government’s commitment to help 1 million more homes this Parliament.
The government has consulted on changes to the Renewables Obligation and Feed in Tariffs schemes and will shortly publish a response to the consultations, detailing how to implement cost control on these schemes. If the proposals are implemented, this will save the average household around £6 and the average small business user £500 on their energy bills in 2020-21. 53
More competition in energy retail markets could also significantly lower bills for both households and small businesses. The government welcomes the Competition and Markets Authority’s (CMA) provisional findings on energy markets and stands ready to take action as necessary to increase competition in energy markets once the CMA publishes its final report next year.
Lower motor insurance costs
The government is determined to crack down on the fraud and claims culture in motor insurance. Whiplash claims cost the country £2 billion a year, an average of £90 per motor insurance policy, which is out of all proportion to any genuine injury suffered. 54 The government intends to introduce measures to end the right to cash compensation for minor whiplash injuries, and will consult on the details in the New Year. 55 This will end the cycle in which responsible motorists pay higher premiums to cover false claims by others. It will remove over £1 billion from the cost of providing motor insurance and the government expects the insurance industry to pass an average saving of £40 to £50 per motor insurance policy on to consumers.
6.6 Opportunities for home ownership: Five Point Plan
This Spending Review prioritises housing by doubling the housing budget from 2018-19. It sets out the most ambitious plan since the 1970s to build homes that support working people in their aim to buy their own home. In the last Parliament, the government took significant steps to support housing supply and low cost home ownership. A reformed planning system, support for SME house builders, and Help to Buy have driven housing starts to a 7 year high and the number of first time buyers increased by almost 60% between 2010 and 2014. 56
The Chancellor set out in the Productivity Plan that there remains more to do, particularly to re-focus support for housing towards low cost home ownership for first time buyers. This Spending Review sets out a Five Point Plan for housing to:
1) Deliver 400,000 affordable housing starts by 2020-21, focussed on low cost home ownership. This will include:
200,000 Starter Homes which will be sold at a 20% discount compared to market value to young first time buyers, with a £2.3 billion fund to support the delivery of up to 60,000 of these, in addition to those delivered through reform of the planning system
135,000 Help to Buy: Shared Ownership homes, which will allow more people to buy a share in their home and buy more shares over time, as they can afford to. The scheme will be open to all households earning less than £80,000 outside London and £90,000 in London, and will relax and remove previous restrictions such as local authorities’ rights to set additional eligibility criteria
10,000 homes that will allow a tenant to save for a deposit while they rent. This will be in addition to 50,000 affordable homes from existing commitments at least 8,000 specialist homes for older people and people with disabilities
The scale of this programme of house building will require all sectors to play a role in delivery. As a result, the government will remove constraints that prevent private sector organisations from participating in delivery of these programmes, including the constraints to bidding for government funding.
2) Deliver the government’s manifesto commitment to extend the Right to Buy to Housing Association tenants. The number of tenants benefiting from the local authority scheme has increased by 319% since 2012, and now extending the scheme will give 1.3 million households the opportunity to become home owners. 57 The government will launch a pilot of the Right to Buy with five Housing Associations, to inform the design of the final scheme.
3) Accelerate housing supply and get more homes built by:
bringing forward further reforms to the planning system, including establishing a new delivery test on local authorities, to ensure delivery against the number of homes set out in Local Plans
supporting the availability of appropriate land for housing, including by releasing public sector land with capacity for 160,000 homes representing a more than 50% increase on the government’s record in the last parliament
ensuring the release of unused and previously undeveloped commercial, retail, and industrial land for Starter Homes, and supporting 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 it contributes to Starter Homes, and subject to local consultation
backing SME house builders, including by amending planning policy to support small sites, extending the £1 billion Builders’ Finance Fund to 2020-21, and halving the length of the planning guarantee for minor developments
offering £2.3 billion in loans to help regenerate large council estates and invest in infrastructure needed for major housing developments
investing £310 million to deliver the first new garden city in nearly 100 years, at Ebbsfleet. This is part of a wider £700 million programme of regeneration at Barking Riverside, Brent Cross, Northstowe and Bicester Garden Town. Together these will support up to 60,000 new homes
4) Extend the Help to Buy: Equity Loan scheme to 2021 and create a London Help to Buy scheme, offering a 40% equity loan in recognition of the higher housing costs in the capital. The scheme will offer buyers with a 5% deposit a loan of up to 40% of the value of a new build home, interest-free for 5 years. This can be used in conjunction with the new Help to Buy: ISA launching on 1 December. First time buyers that save in a Help to Buy: ISA will receive a 25% government bonus on top of their own savings, up to a maximum government bonus of £3000, which can be put towards the purchase of their first home.
5) Higher rates of Stamp Duty Land Tax (SDLT) will be charged on purchases of additional residential properties, such as buy to let properties and second homes, with effect from 1 April 2016. The higher rates will be 3 percentage points above the current SDLT rates. The government will use some of the additional tax collected to provide £60 million for communities in England where the impact of second homes is particularly acute. The tax receipts will help towards doubling the affordable housing budget. This will help first time buyers.
Taken together the capital programme, loan schemes, Help to Buy and other measures amount to over £20 billion investment in housing over the Spending Review period.
The government remains committed to improving the transparency of mortgage fees and making it easier for borrowers to choose the best mortgage deals. It welcomes the significant step by the industry today in committing to several important actions including to standardise the presentation and definition of mortgage fees. These are the key recommendations from the joint report published today by Which? and the Council of Mortgage Lenders, which was requested by the government at Autumn Statement 2014.
To continue to protect the most vulnerable, the government will increase the funding available to invest in innovative ways of preventing and reducing homelessness, including:
protecting Department for Communities and Local Government (DCLG) funding for targeted homelessness intervention
devolving an increased level of funding to local authorities while ending the current management fee for temporary accommodation, giving them greater flexibility to invest in preventing homelessness providing £40 million for services for victims of domestic abuse, tripling the dedicated funding provided compared to the previous four years and complementing the wider violence against women and girls strategy
6.7 Ensuring a fair contribution through the tax system
The government remains committed to a competitive tax system with lower rates and high allowances delivering lower taxes for businesses and individuals. But the tax system also needs to be fair. The government will therefore continue to address imbalances in the system where some individuals and businesses benefit disproportionately from certain rules – and will also continue to tackle avoidance, evasion, non-compliance and tax planning.
Tackling tax avoidance
The government will introduce a new penalty of 60% of the tax due to be charged in all cases successfully tackled by the General Anti Abuse Rule (GAAR) and will make small changes to the GAAR’s procedure to improve its ability to tackle marketed avoidance schemes.
New rules will be introduced to stop avoidance of stamp tax where ‘deep in the money’ options are used to transfer shares to a depositary receipt issuer or clearance service. To reduce opportunities for income to be converted to capital to gain a tax advantage, the government will shortly publish a consultation on the company distributions rules, and will amend the Transactions in Securities rules and introduce a Targeted Anti-Avoidance Rule.
The government is investing £23 billion in school buildings, opening 500 new free schools, creating 600,000 school places, rebuilding and refurbishing over 500 schools and addressing essential maintenance needs. The government is also investing in new school places for children with special educational needs and disabilities.
The government is making the biggest investment in transport infrastructure in generations. The government will invest £61 billion in transport this Parliament, 68 an increase of £20 billion compared to the previous parliament. In this Spending Review and Autumn Statement, the government is confirming investment in the Network Rail investment programme 69 as well as capital expenditure over the next 5 years of £46.7 billion by the Department for Transport (DfT) – including starting construction on High Speed 2 (HS2) and confirming £13.4 billion to continue to deliver the Roads Investment Strategy. The government is also driving forward with major improvements to transport in the Northern Powerhouse.
The Roads Investment Strategy signals the biggest investments in roads since the 1970s. This overall £15 billion of investment in the Roads Investment Strategy period will include resurfacing over 80% of the strategic road network, and delivering over 1,300 miles of additional lanes, the equivalent of travelling from Bristol to Newcastle four times. Future roads investment will be underpinned by a new Roads Fund paid for directly from the revenues of Vehicle Excise Duty from 2020-21. An ambitious second Roads Investment Strategy will be published before the end of this Parliament setting out how the Roads Fund will be invested.
In addition the Spending Review and Autumn Statement provides £250 million over the next 5 years to tackle the potholes that blight our local roads, on top of nearly £5 billion of funding for roads maintenance, a £300 million increase compared to the previous Parliament.
The government will deliver on commitments to freeze regulated rail fares at no more than inflation (RPI) for the entire Parliament, and will go even further with action to ensure that rail passengers have access to compensation when trains are more than a few minutes late.
The Spending Review and Autumn Statement provides £475 million over the next 5 years to fund large local transport projects, enabling local areas to bid for funding for projects that would be too expensive for them to pay for by themselves, such as the Lowestoft Third River Crossing and the North Devon Link Road.
The Spending Review and Autumn Statement provides £300 million over the next 5 years for a new Transport Development Fund, for the next generation of transport infrastructure projects. This could include providing development funding for projects such as Crossrail 2 and proposals emerging from the Northern Transport Strategy, following advice from the NIC at Budget 2016.
The government will provide an exemption for Energy Intensive Industries, including the steel industry, from the policy costs of the Renewables Obligation and Feed-in Tariffs, to ensure that they have long-term certainty and remain competitive.
The government will increase funding for the Renewable Heat Incentive to £1.15 billion by 2020-21, while reforming the scheme to deliver better value for money. By the end of the Parliament the government expects to have incentivised enough additional renewable heat to warm the equivalent of over 500,000 homes.
Company car tax
The government is retaining the diesel supplement in company car tax until 2021, when EU-wide testing procedures will ensure new diesel cars meet air quality standards even under strict real world driving conditions.
7.8 Supporting the arts, culture and sport
The government is committed to supporting the arts and our world class national museums and galleries which make a rich contribution to society and our economy. The government will ensure that these sectors have the same amount of government funding in cash terms in 2019-20 as they do today.
In 2014, there were 34 million overseas visitors who contributed over £28 billion to the UK economy, making travel and tourism one of the UK’s largest service exports. 71 Recognising this, the government will increase support to tourism by creating a new £40 million Discover England Fund to boost tourism across England.
7.9 A dynamic economy
Businesses are the lifeblood of the economy, and the government is determined to create the conditions for UK companies to succeed at home and abroad. The UK has risen to be the sixth best place to do business in the world, up from tenth in 2014, and the second best in Europe, 72 and is the best country in the EU to start a business. 73
Since 2010 the headline rate of corporation tax has been cut from 28% to 20%, and will fall further, to 18% by the end of the Parliament. Overall corporation tax cuts since 2010 will save businesses £13 billion a year by 2020-21 and give the UK the lowest tax rate in the G20 (Chart 1.11). 74 To support investment and innovation, the government introduced the Patent Box and overhauled Research and Development tax credits, and announced at Summer Budget that the Annual Investment Allowance will be set at £200,000 – its highest ever permanent level – for the rest of the Parliament.
These reforms have enabled the private sector to drive the UK’s economic recovery. Since the first quarter of 2010, the private sector has created 2.5 million jobs – more than 5 jobs for every public sector job lost – and business investment has increased by 26%. 75 The Spending Review and Autumn Statement takes further action to boost business. Over £100 billion will be invested to improve infrastructure, and funding for science is being protected in real terms. The Spending Review and Autumn Statement increases investment in catapult centres and protects and extends funding for the Aerospace Technology Institute (ATI) and the Advanced Propulsion Centre (APC). Businesses will also benefit from the investment the government is making across schools, further education and higher education, as well as the apprenticeship levy which will increase skills and puts control of funding in the hands of employers.
Backing small businesses
The UK’s small and medium sized enterprises now employ 15.6 million people, up from 13.7 million in 2010. Over the last two years the number of small businesses employing someone other than the owner has grown by 100,000. 77 The government understands that small businesses need tailored support. Already, Start-Up Loans have provided £180 million of funding to 33,600 entrepreneurs and in the last Parliament, the government cut the cumulative burden of regulation by over £10 billion. 78 From April 2016 the Employment Allowance will rise to £3,000, benefiting over 1 million employers, and helping many businesses take on their first employee. The cancellation of the planned September 2015 fuel duty increase means a small business with a van will have saved £1,357 by the end of 2015-16 compared to plans inherited by the government at the start of the last Parliament. At the Spending Review and Autumn Statement small businesses will continue to receive support for apprentices. The apprenticeship levy will only be paid by employers with a paybill of more than £3 million, meaning that less than 2% of UK employers will pay it. The government will meet its commitment to 75,000 Start-Up Loans by the end of this Parliament.
The Spending Review and Autumn Statement further supports small businesses by extending the doubling of small business rate relief (SBRR) in England for 12 months to April 2017. Around 405,000 of the smallest businesses will continue to receive 100% relief from business rates, with around a further 200,000 benefiting from tapering relief. 79 The government is undertaking a review of business rates. The review will be fiscally neutral and will report at Budget 2016.
Number of SME employers in private sector
Open, competitive markets are crucial to a dynamic economy. The UK has a world-leading competition regime, but many markets could work better for households and businesses. Strong competition encourages innovation and efficiency and a better deal for customers. Overly restrictive regulation can also put the brakes on the competitive process and favour incumbent firms and established business models. The government will announce shortly important steps that follow on from the government’s productivity plan, ‘Fixing the foundations: creating a more prosperous nation’ to improve competition, and will improve markets, reduce household bills and support productive businesses.
To support small and medium sized enterprises (SMEs) in accessing finance, the government plans to designate Experian, Equifax and CreditSafe under the Small and Medium Sized Business (Credit Information) Regulations 2015. These CRAs will receive SME credit information from designated banks and provide equal access to this information to all finance providers. This is a significant milestone in a major structural reform that will promote competition in the SME credit market.
Competition between broadband providers supports the delivery of the fast and reliable broadband a modern, productive economy needs. Innovative approaches to supporting the market will help deliver ultrafast speeds to nearly all premises. The government will explore setting up a new broadband investment fund, to support the growth of alternative network developers by providing greater access to finance. The fund would be supported by both public and private investors, and would be managed by the private sector on a commercial basis.
The government is also providing £7 million through the Regional Air Connectivity Fund to support new air routes promoting domestic and international connectivity and stimulating jobs and growth, including from Belfast to Carlisle and from Derry to Dublin.
The Scotland Bill, containing significant tax and spending powers, has completed its House of Commons stages and is on track to receive Royal Assent in early 2016. Discussions on the accompanying Fiscal Framework are ongoing, with the Joint Exchequer Committee having met 4 times since May. The Scotland Bill and the Fiscal Framework will mean the Scottish Parliament will become one of the most powerful devolved legislatures in the world. The government is committed to implementing the Smith Commission Agreement in full.
The Spending Review delivers significant real-terms increases to Scottish Government capital budgets. Funding available for infrastructure investment via the block grant through to 2020‑21 will rise by 14%, meaning over £1.9 billion more than if it had been held at 2015-16 levels.
Implementation of the City Deal for Glasgow and the Clyde Valley is now well underway and headline proposals have been received from local partners for Aberdeen and Inverness.
The government is also providing £7 million through the Regional Air Connectivity Fund to support new air routes promoting domestic and international connectivity and stimulating jobs and growth, including from Dundee to Amsterdam and from Edinburgh to Oxford.
The government confirms £5 million of funding towards the Burrell Renaissance project. This will support the collection going on tour, as well as refurbishment of the Grade A listed museum in Glasgow.
The government is introducing a floor in the level of relative funding provided to the Welsh Government at 115% of comparable spending per head in England. Funding arrangements in the next Parliament will need to take full account of the Welsh Government’s new powers and responsibilities, given the significant impact that tax devolution could have on its funding. The funding floor will therefore be reset at the next Spending Review. The government will legislate to remove the requirement for the Welsh Assembly to hold a referendum in order to implement the Welsh Rates of Income Tax, to reflect the change in the debate in Wales.
The Spending Review delivers significant real-terms increases to Welsh Government capital budgets. Funding available for infrastructure investment via the block grant through to 2020-21 will rise by 16%, meaning over £900 million more than if it had been held at 2015-16 levels.
The government is working with the Cardiff Capital Region and the Welsh Government to deliver an ambitious City Deal for Cardiff. The Spending Review announces an in principle commitment to contribute to an infrastructure fund for the Cardiff region.
The government is also investing in projects like the new, modern prison in Wrexham, a £212 million investment which will create 1,000 jobs.
DCLG will shortly consult on changes to the local government finance system to pave the way for the implementation of 100% business rate retention by the end of the Parliament. The consultation will take into account the main resources currently available to councils, including council tax and business rates. As part of these reforms, the main local government grant will be phased out and additional responsibilities devolved to local authorities, empowering them to drive local economic growth and support their local community. For example, the government will consider transferring responsibility for funding the administration of Housing Benefit for pensioners and Transport for London’s capital projects to local government and will also consult on options to transfer responsibility for funding public health. The government will consult on these and other additional responsibilities in 2016.
The government will also shortly consult on changes to the local government finance system to rebalance support including to those authorities with social care responsibilities by taking into account the main resources available to councils, including council tax and business rates the government will also consult on reforms to the New Homes Bonus, including means of sharpening the incentive to reward communities for additional homes and reducing the length of payments from 6 years to 4 years. This will include a preferred option for savings of at least £800 million, which can be used for social care. Details of both reforms will be set out as part of the local government finance settlement consultation, which will include consideration of proposals to introduce a floor to ensure that no authority loses out disproportionately
To support local authorities to deliver more efficient and sustainable services, the government will allow local authorities to spend up to 100% of their fixed asset receipts (excluding Right to Buy receipts) on the revenue costs of reform projects. Instead of holding assets that could be made surplus, councils will be able to sell them and reinvest in their services that allow them to deliver more for less – for example in home improvements that can help keep older people from needing to go to hospital. The flexibility to use asset receipts for reform projects will be subject to a number of conditions, including limits on the years in which the flexibility will be offered and the qualifying criteria for reform projects. This detail will be set out by DCLG alongside the Local Government settlement in December.
The government will consult on updating the Transparency Code to require all local authorities to record details of their land and property assets in a consistent way on the government’s electronic Property Information Management System (e-PIMS).
The Spending Review extends One Public Estate with £31 million funding to support local authorities to work with other local public sector property owners and design more efficient asset management strategies. The government will shortly announce which local authorities’ bids were successful for the third phase of One Public Estate. The government will also strengthen the existing legislation around Right to Contest to allow local communities to challenge the use of land and property that is in use by local authorities, not just property that is empty or under-used, where these assets could be made surplus and put to better use.
10.3 Capital Gains Tax payment window
Capital Gains Tax (CGT) due on residential property is currently paid between 10 and 22 months after a disposal is made. This is out of step with the position for other taxpayers, such as those paying income tax through the Pay As You Earn (PAYE) system. This delay can also cause problems where a taxpayer forgets to pay, or where they no longer have enough of the proceeds from the disposal to cover the tax charge. To address this the Spending Review and Autumn Statement introduces a requirement for the capital gains tax due to be paid within 30 days of completion of any disposal of residential property. This requirement will be introduced from April 2019 to ensure that HMRC’s digital systems are ready to provide support, making paying this tax simpler and quicker for taxpayers.
10.5 Selling government assets and creating space for homes
The government is committed to releasing surplus assets to drive economic growth and release land for housing. Over the last Parliament the government saved £1.8 billion by vacating and selling property no longer needed. 105 But taxpayers continue to own an estimated £358 billion of land and property and the government’s office estate remains large with almost 800 office buildings spread around the country. 106
Departments have agreed to release an additional £4.5 billion worth of surplus land and property assets which will contribute towards the government’s target of £5 billion of receipts by 2020. Table 1.A provides a breakdown of estimated receipts from sales of land and property by departments agreed for 2016-17 to 2020-21.
Table 1.11: Sales of land and property assets agreed as part of Spending Review settlements
Estimated receipts between 2016-17 and 2020-21 (£ million)
Department of Health -1,950
Ministry of Defence -1,000
Ministry of Justice -640
Department for Communities and Local Government -410
Department for Energy and Climate Change -200
Department for Business, Innovation and Skills -120
Foreign and Commonwealth Office -75
Other departments -140
TOTAL POLICY DECISIONS -4,535
Source: Departmental estimates
The government has previously committed to releasing enough land, by 2020, to build 150,000 homes. The Spending Review and Autumn Statement announces that departments have now committed to sell land for more than 160,000 homes. In addition to the land released by central government departments, the Greater London Authority is in the process of disposing of land for a further 5,000 homes. Local authorities can also play a key role in selling land for housing, and the government will set the contribution local authority land disposals can make by the Budget.
Table 1.12: Sales of land for housing agreed as part of spending review settlements
Estimated housing capacity of land released by 2020
Ministry of Defence 55,000
Department for Transport 38,000
Department for Communities and Local Government 36,000
Department of Health 26,000
Ministry of Justice 5,000
Department for Business, Innovation and Skills 1,000
Source: Departmental estimates
In line with its commercial remit under the Crown Estate Act 1961, the Crown Estate also anticipates selling land over the Parliament that could deliver a further 2,500 homes.
By 2020 the government’s footprint will be significantly consolidated, transforming how government services work together. The DWP will reduce its estate footprint by 20%, including seeking greater co-operation with local authorities, to improve benefit delivery and reduce costs. HMRC will also significantly consolidate its footprint, moving from 170 offices to 13 large, modern regional centres over the next 5 years.
To help deliver this, the government is transforming its approach to land and property asset management, centralising ownership of the estate and charging departments market-level rents for freehold assets they currently own. The new model will be operational by March 2017, subject to legislative requirements, and all relevant central government land and property will transfer to the new central body by the end of this Parliament. The Spending Review announces that Liz Peace has been appointed as shadow chair to lead the implementation of the new body. The first assets transferred into the body will include freehold office, warehouse, storage and depot properties (and leaseholds where appropriate). Similar charging regimes will be introduced to the same timescale for the MOD and the FCO overseas estate.
Corporate and financial assets
The government is seeking up to a further £5 billion of corporate and financial asset sales by March 2020, building on successes in the last Parliament. Through the Spending Review up to £4.6 billion of assets have been identified. Subject to a value for money assessment, the government will:
allow Network Rail to sell assets and re-invest proceeds in rail infrastructure
press ahead with the privatisation of the Green Investment Bank with a sale expected to be concluded during 2016-17explore the sale of the government’s 49% shareholding in NATS (air traffic services)consult on options to move operations of the Land Registry to the private sector from 2017develop options to bring private capital into the Ordnance Survey before 2020sell Department of Health (DH) corporate and financial assets: Community Health Partnerships subordinated debt and Credit Guarantee Finance lending to Private Finance Initiative projectsIn addition, the government is continuing to pursue the sale of the pre-2012 income contingent repayment student loan book, with a first sale expected to commence in 2016-17.
Construction will begin on HS2 during the Parliament, and the Spending Review confirms a funding envelope of £55.7 billion in 2015 prices, which will deliver HS2 from London to Birmingham by 2026, and to Leeds and Manchester by 2033. During construction, HS2 is anticipated to support up to 25,000 jobs and up to 2,000 apprenticeships.
The government will provide £295 million over 5 years to improve the energy efficiency of schools, hospitals and other public sector buildings. Separately, over £300 million of funding for up to 200 heat networks will generate enough heat to support the equivalent of over 400,000 homes and leverage up to £2 billion of private capital investment.
The Department for Communities and Local Government (DCLG) settlement includes:more than £20 billion of gross capital investment over the next 5 years to support housing and local growth doubling the housing budget from 2018-19 to deliver 400,000 new homes, the biggest affordable house building programme by a government since the 1970s further spending on targeted initiatives that tackle homelessness and support the victims of domestic violence overall resource savings of 29% by 2019-20 through better financial management and further efficiency SecurityThe government will double the housing budget from 2018-19 to deliver at least 400,000 affordable homes including 200,000 Starter Homes, 135,000 new Help to Buy Shared Ownership homes and 10,000 Rent to Buy homes. The government will also extend the Right to Buy scheme to Housing Association tenants, create a London Help to Buy scheme with a 40% equity loan, release enough public sector land for 160,000 homes, and provide £310 million of funding to deliver 15,000 homes at Ebbsfleet, the first garden city in the UK for over 100 years.
The Spending Review invests in the ongoing HM Courts and Tribunal Service reform programme, which is rationalising the under-used court estate. Over £700 million will be invested to fully digitise the courts and create a more modern estate. This will generate savings to the taxpayer of approximately £200 million a year from 2019-20. The government will also look at changes to court fees as it continues to put the courts on a more sustainable financial footing.
Together the investment in the courts and prisons systems will enable MoJ to release land for more than 5,000 homes.
By focusing on its reform priorities and delivering significant efficiencies within its back office running costs, MoJ will be able to reduce its administrative budget by 50% by 2019-20.
Extending averaging for farmers – Following the consultation announced at March Budget 2015, the averaging period for self-employed farmers will be extended from 2 years to 5 years as of April 2016, with farmers having the option of either averaging period. (Finance Bill 2016)
Business Investment Relief – 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.
ISAs: annual subscription limits – The government will maintain the ISA, Junior ISA and Child Trust Fund annual subscription limits at their current level for 2016-17. The ISA limit will be kept at £15,240. The Junior ISA and Child Trust Fund limits will be kept at £4,080.
ISAs: qualifying investments – The list of qualifying investments for the new Innovative Finance ISA will be extended in Autumn 2016 to include debt securities offered via crowdfunding platforms. The government will continue to explore the case for extending the list to include equity crowdfunding.
ISAs: tax advantages during the administration of an estate – The government will legislate to allow the ISA savings of a deceased person to continue to benefit from tax advantages during the administration of their estate and will set out further plans for introducing this measure in 2016, following technical consultation with ISA providers. (Finance Bill 2016)
Inheritance tax exemption for compensation and ex-gratia payments to victims of persecution during the World War II era – The government will legislate Extra Statutory Concession F20, which gives an inheritance tax exemption in respect of certain compensation and ex-gratia payments for World War II claims. The legislation will include payments made under a recently created compensation scheme known as the Child Survivor Fund. The legislation will apply to deaths on or after 1 January 2015. (Finance Bill 2016)
Inheritance tax and undrawn pension funds in drawdown pensions – The government will legislate to ensure a charge to inheritance tax will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. This will be backdated to apply to deaths on or after 6 April 2011. (Finance Bill 2016)
Deeds of variation – Following the review announced at March Budget 2015, the government will not introduce new restrictions on how deeds of variation can be used for tax purposes but will continue to monitor their use.
Temporary absence in Housing Benefit and Pension Credit – The government will end the payment of Housing Benefit and Pension Credit to claimants to who travel outside of Great Britain for longer than 4 weeks consecutively, from April 2016. (27)
Capping Housing Benefit in the social rented sector – The government will apply the relevant Local Housing Allowance rates as maxima for Housing Benefit paid in the social rented sector, including the Shared Accommodation Rate for single claimants aged under 35 without dependent children. The cap will apply from 1 April 2018 but only to tenancies signed after 1 April 2016. (
Stamp duty land tax: additional properties – Higher rates of SDLT will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes, from 1 April 2016. The higher rates will be 3 percentage points above the current SDLT rates. The higher rates will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property given the role of this investment in supporting the government’s housing agenda. The government will consult on the policy detail, including on whether an exemption for corporates and funds owning more than 15 residential properties is appropriate. The government will use some of the additional tax collected to provide £60 million for communities in England where the impact of second homes is particularly acute. (5)
Stamp Duty Land Tax: application to certain authorised property funds – The government will introduce a seeding relief for Property Authorised Investment Funds (PAIFs) and Co-ownership Authorised Contractual Schemes (CoACSs) and make changes to the SDLT treatment of CoACSs investing in property so that SDLT does not arise on the transactions in units. There will be a defined seeding period of 18 months, a 3 year clawback mechanism and a portfolio test of 100 residential properties and £100 million value or 10 non-residential properties and £100 million value. These changes will take effect from the date Finance Bill 2016 receives Royal Assent. (Finance Bill 2016)
Stamp Duty Land Tax: changes to the filing and payment process – The government will consult in 2016 on changes to the SDLT filing and payment process, including a reduction in the filing and payment window from 30 days to 14 days. These changes will come into effect in 2017-18. (Finance Bill 2017) (6)
Annual Tax on Enveloped Dwellings (ATED) and 15% rate of Stamp Duty Land Tax: scope of reliefs – The government will extend the reliefs available from ATED and the 15% higher rate of SDLT to equity release schemes (home reversion plans), property development activities and properties occupied by employees from 1 April 2016. (Finance Bill 2016)
Small Business Rate Relief (SBRR) – The government will extend the doubling of SBRR for a further year from 1 April 2016. (2)
Capital Gains Tax
Capital Gains Tax (CGT) for non-UK residents disposing of UK residential property – The government will amend the CGT computations required by non-residents on the disposal of UK residential property by removing with retrospective effect from 6 April 2015 a double charge that occurs in some circumstances and correcting an omission with effect from 25 November 2015. The government will also give HMRC powers to prescribe circumstances when a CGT return is not required by non-residents and will add CGT to the list of taxes that the government may collect on a provisional basis. (Finance Bill 2016)
Tax administration and simplification
Making tax digital – The government will invest £1.3 billion to transform HMRC into one of the most digitally advanced tax administrations in the world. Most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account, reducing errors through record keeping. HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology. This will not apply to individuals in employment, or pensioners, unless they have secondary incomes of more than £10,000 per year. The government will publish its plans to transform the tax system shortly and will consult on the details in 2016. (20)
HMRC’s customer cost reduction target – HMRC will introduce a strengthened target to reduce the annual cost to business of tax administration by £400 million by the end of this Spending Review period.
Amendments to Schedule 3 of the Customs and Excise Management Act – The government will publish draft amendments to the Customs and Excise Management Act 1979 to clarify existing provisions concerning the seizure and detention of goods. (Finance Bill 2016)
Office of Tax Simplification (OTS) review of employment status – The government has responded to the final report of the OTS review of employment status and is taking forward the majority of recommendations.
Taxation of accommodation benefits – Following recommendations from the 2014 OTS report on simplifying the administration of employee benefits and expenses, the government will publish a call for evidence on the current tax treatment of employer provided living accommodation.
Simple assessment – The government will publish draft legislation that will enable a new, simpler process for paying tax. This will be used for taxpayers in self-assessment who have simple tax affairs where HMRC already holds all the data it needs to calculate the tax liability, and where existing payment processes are not available. Taxpayers will be sent a calculation which will be a legally enforceable demand for payment, and taxpayers will be able to challenge and appeal these calculations. This process will come into effect in the 2016-17 tax year.
‘On or Before’ Reporting Obligation Review – The government has decided that the 2 year temporary relaxation, allowing existing micro-employers using Real-Time PAYE to report all payments they make in a tax month on or
CML-Which? report on mortgage fee transparency – The government welcomes the industry commitments set out in the Council of Mortgage Lenders and Which? report on mortgage fee transparency published today. This will make it easier for borrowers to understand and choose the best mortgage deals.
Motor insurance – The government will bring forward measures to reduce the excessive costs arising from unnecessary whiplash claims, and expects average savings of £40 to £50 per motor insurance policy to be passed onto customers, including by:
Local plans – The government will bring forward proposals for a delivery test on local authorities, to ensure delivery against the homes set out in local plans within a reasonable timeframe.
Neighbourhood plans – The government will ensure that local communities can allocate land for housing through neighbourhood plans, even if that land is not allocated in the local plan.
Starter Homes – The government will amend planning policy to ensure the release of unused and previously undeveloped commercial, retail and industrial land for Starter Homes, and support regeneration of previously developed, brownfield sites in the greenbelt, by allowing them to be developed in the same way as brownfield sites elsewhere, providing it delivers Starter Homes. This will be subject to local consultation, such as through neighbourhood plans.
SME house builders – The government will halve the length of the planning guarantee and amend planning policy to support small sites, while ensuring protection for existing gardens.
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