PICTURE Chancellor George Osborne by M. Holland
Self-employed traders such as ADIs will have a different experience with HM Revenue and Customs (HMRC) after the Chancellor’s November statement. As a result of changes announced by the Chancellor, George Osborne, HMRC is to give most taxpayers a digital tax account.
You will be able to see your tax position online and access the account using free apps and software.
But you will also have to keep the account up to date. The self-employed and landlords must input income and expenses every quarter, instead of waiting until after the end of the tax year to tell HMRC about profits. It is not yet known if this will also mean tax needs to be paid sooner.
Employees and pensioners will not be part of this new digital world, unless you have another source of income which pays you over £10,000 a year.
HMRC will be able to send you a tax bill on the basis of the information they already hold, replacing self-assessment with HMRC assessment.
This new approach will be used where HMRC believe you have “simple” tax affairs.
If you receive an automatic tax bill, you should check it straight away. If you do not challenge the bill within a limited period, it may become final and HMRC will then collect the tax.
Responses to other reforms outlined in the Autumn Statement from within the motoring sector have been mixed. The Society of Motor Manufacturers and Traders said: “The commitment by the Chancellor to a long-term industrial strategy for the automotive sector is encouraging.
“More specifically, we were pleased to see he heeded our call for increased investment in Catapult Centres and the extension of funding for the Advanced Propulsion Centre (APC) – both of which are vital to securing the UK’s position as a global centre of excellence for innovation.
“Meanwhile, the renewed support for ultra-low emission vehicles (ULEVs) (including the maintaining of the £5,000 plug-in grant for electric vehicles) will help maintain the UK’s position as Europe’s fastest growing market for these new technologies.”
However, the BVRLA criticised what it said was the Chancellor’s attack on company cars. “We’re disappointed with the decision to defer the removal of the three per cent diesel supplement on benefit in kind tax bands,” BVRLA chief executive Gerry Keaney said. “This move will penalise company car drivers for decisions they have already made, based on the Chancellor’s 2012 announcement that the supplement would be lifted in 2016.
“What is especially frustrating is that many of these motorists are being penalised for driving some of the latest, most fuel-efficient vehicles on UK roads.”
The BVRLA is also concerned that a 37 per cent budget reduction for the Department for Transport (DfT) will result in costs being transferred onto the fleet sector. “What will the DfT have to stop doing to achieve these savings?” Keaney asked. “While we welcome that companies will benefit from more efficient digital systems, the Government must not compromise on the quality or delivery of these services to save money.”
The Freight Transport Association (FTA) has said that the decision not to reduce fuel duty was a missed opportunity by the Government.
In its submission ahead of the 2015 Statement – FTA had called on Mr Osborne for a 3p per litre reduction in fuel duty to ease cost pressures on domestic road freight, stimulate growth and create jobs.
However, within his announcement the Chancellor neglected to acknowledge the importance of the reduction.
Karen Dee, FTA’s director of policy, said: “The lack of recognition of the importance of reducing fuel duty is a missed opportunity by the Government in the Autumn Statement.
“The 3p per litre reduction would have provided much-needed economic relief – not only to the logistics sector, which faces continuing difficult trading conditions, but also to the wider motoring public who rely on their cars to get to and from work.”
To tackle poor road surfaces found across Britain, the Chancellor confirmed that a permanent National Pothole Fund will be established. The Government will spend £250 million over the next five years on pothole repairs.
Also announced were reforms for claims on minor car accidents, designed to undermine the compensation culture. The reforms remove the right to general damages for minor soft tissue injuries and remove legal costs by transferring personal injury claims of up to £5,000 to the small claims court.
The Association of British Insurers commented: “This is a significant breakthrough in tackling the compensation culture and is good news for motorists.
“Insurers have long called for meaningful reform in reducing costs in the compensation system, including increasing the Small Claims Track Limit. Previous Government reforms have already led to insurers passing on over £1 billion in savings to motorists through lower premiums, and in a highly competitive motor insurance market, insurers will continue to pass on savings to customers”.
The Chancellor claimed that if the insurance industry transferred savings this reform will bring over to the customer, premiums should fall by around £40 a year.
There was no update, however, on any potential changes for fuel duty or the £5,000 plug-in car grant, the latter of which is set to expire during 2016.