Budget  

Chancellor announces more action on tax avoidance

Chancellor announces more action on tax avoidance

Chancellor of the Exchequer Philip Hammond has announced further action to tackle tax avoidance and evasion.

Addressing the House of Commons today (22 November), Mr Hammond said HM Treasury would raise £4.8bn by 2022/23 through a package of measures to crackdown on money loss to the Treasury.

He said this would "continue the work of the last seven years" which saw £160bn collected in taxes which were due.

Mr Hammond said many of the issues of tax avoidance and evasion needed international solutions but he said the UK was "leading the charge" on this issue.

He announced that the government would today published a position paper on the tax challenges posed by the digital economy.

Mr Hammond said the government would address the issue of multinational digital businesses avoiding tax by paying royalties to branches in low-tax jurisdictions in measures which would raise £200m a year.

He said: "So from April 2019, and in accordance with our international obligations, we will apply income tax to royalties relating to UK sales, when those royalties are paid to a low tax jurisdiction.

"Even if they do not fall to be taxed in the UK under our current rules."

HM Treasury also announced that the government would publish a consultation response on the proposed requirement for designers of certain offshore structures that could be misused to evade taxes to notify HM Revenue & Customs of these structures and the clients using them.

On personal taxes, Mr Hammond announced that the individual allowance would rise to £11,850 from April which he said would make the typical basic rate taxpayer £1,073 better off compared to 2010.

Meanwhile the higher rate threshold was increased to £46,350.

He did not follow up his attempts to reform National Insurance after his previous Budget earlier this year and announced no changes to this.

The previous Spring Budget sought to level the playing field between different employment forms.

At the time Mr Hammond said lower National Insurance contributions from self-employed workers was forecast to cost public finances £5bn this year alone. 

To make the system "fairer", he proposed that National Insurance contributions would increase for the self-employed by 1 per cent to 10 per cent from April next year. 

That would then have increased again to 11 per cent in 2019 which, together with other changes, would have raised a net £145m a year - around 60p a week per self-employed person.

But Mr Hammond was accused of picking on small business and entrepreneurs and the proposal was dropped after criticism.

damian.fantato@ft.com