Taxing times from the Chancellor

Sue Moore

Sue Moore

Chancellor Philip Hammond announced very few changes but one he did announce, and which was met with some groans, was an increase in the Insurance Premium Tax (IPT).

Telling the House it was still among the lowest rates in Europe, Mr Hammond said he was raising this from 10 per cent to 12 cent with effect from June 2017.

When making this announcement, chancellor Philip Hammond commented that the UK rate of IPT was lower than many other countries and it was less than VAT so is this a hint he will increase the IPT to align with VAT?

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Continuing the theme from earlier years of tackling tax avoidance, the chancellor announced a new penalty for those enabling tax avoidance, a person who enables a business or a person to use a tax avoidance arrangement that is subsequently defeated by HMRC will be liable for the penalty.

The draft legislation will be published shortly and follows a consultation earlier this year.

Other specific measures to prevent tax avoidance were announced including changes to the VAT flat rate scheme and disguised remuneration schemes.

Another welcome change was the decision to create a new £1,000 tax allowance for property and trading income.

This basically applies to people who get a few hundred pounds' worth of supplementary income a year from selling things on eBay or renting out a room a couple of times a year on sites such as Air B&B.

People might not bother reporting they have rented out their driveway, for example, every time there has been a match at Twickenham, so this change saves on administration for everybody.

Sue Moore is technical manager, private client at the Tax Faculty of the Institute of Chartered Accountants in England and Wales