Business Rates Reform

Several measures were announced in relation to the reform of business rates, to apply from 1 April 2017 as follows:

  • the Small Business Rate Relief (SBRR) is permanently doubled from 50% to 100%;
  • the thresholds are increased; businesses with a property with a rateable value of £12,000 and below will receive 100% relief and businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief;
  • the threshold for the standard business rates multiplier is increased to a rateable value of £51,000.

It was also announced that from April 2020 the annual indexation of business rates will be linked to the CPI (currently it is linked to the RPI).

Increase in the Rate of Insurance Premium Tax (‘IPT’)

The standard rate of IPT is to be increased from 9.5% to 10%. This measure will apply to premiums received on or after 1 October 2016, except for insurers who use a special accounting scheme. They will be required to account for IPT at the new rate in respect of contracts entered into before 1 October 2016 only where a premium is received after 1 February 2017. From 1 February 2017, the new rate applies to all premiums, regardless of when the contract was entered into.

Apprenticeships Levy

An apprenticeship levy will be introduced in April 2017. It will be set at a rate of 0.5% of an employer’s paybill and will be paid through PAYE. Each employer will receive an allowance of £15,000 to offset against their levy payment. This means the levy will only be paid on any paybill in excess of £3m. The Government will apply a 10% top-up to monthly funds entering apprenticeship levy payers’ digital accounts in England from April 2017.

Soft Drinks Industry Levy

The Chancellor has announced a new soft drinks industry levy coming into effect in 2018, targeted at producers and importers of soft drinks that contain added sugar.

The levy will be set in two bands according to the sugar content. Pure fruit juices and milk-based drinks will be excluded, and there will be provisions for the smallest producers to be outside the scope of the new measures.

Netherlands Benefit Act for Victims of Persecution in World War 2

Legislation will be introduced to exempt from income tax for 2016/17 onwards certain pension and annuity payments made by the Netherlands to victims of Nazi and Japanese aggression during WW2.

Royalty Withholding Tax

Finance Bill 2016 will introduce a withholding tax which will apply where a payment of a royalty is made to a non-resident connected person as part of arrangements the purpose of which is to obtain a tax advantage by virtue of a provision of a double tax agreement (DTA), other than where obtaining that benefit in those circumstances is in accordance with the object and purpose of that DTA. The provision will have effect for payments made from 17 March 2016, and where it applies, the payment must be made under deduction of income tax regardless of any DTA which would otherwise restrict the UK’s taxing rights.

With effect from the date of Royal Assent to Finance Act 2016 a change to the definition of royalties to which deduction of tax applies will come into effect, and royalties connected with a permanent establishment that a non-UK resident person has in the UK will be considered to come from a source in the UK. Consequential changes will also be made to the diverted profits tax.