The Information Commissioner’s Office (ICO) is warning companies making nuisance calls to expect more fines in 2016.

The ICO has reported that they imposed more than £1,000,000 worth of penalties for nuisance calls and text messages in 2015, and anticipates they will issue a similar amount in early 2016.

The fines issued in 2015 included:

• £295,000 of fines for companies offering call blocking or nuisance call prevention services
• an £80,000 fine to a PPI claims firm that sent 1.3 million text messages
• a £200,000 fine to a solar panels company that made six million nuisance calls
• a £130,000 fine to a pharmacy company that was selling customer details to postal marketing companies

In addition the ICO report that the fines related to nuisance marketing in 2015 amounted to £1,135,000. These included £400,000 fines for nuisance texts, £575,000 fines for nuisance calls and a £130,000 fine for selling customer records for marketing. Details of the businesses penalised and fined can be found by using the hyperlink.

Andy Curry, ICO Enforcement Group Manager, said:

‘Nuisance marketing calls frustrate people. The law is clear around what is allowed, and we’ve been clear that we will fine companies who don’t follow the law. That will continue in 2016. We’ve got 90 on going investigations, and a million pounds worth of fines in the pipeline.’

According to the ICO, PPI claims prompted the most complaints, followed by accident claims. Areas identified as emerging sectors for nuisance calls and texts included call blocking services, oven cleaning services and industrial hearing injury claims.

Internet link: ICO news

Confirms the Scottish Rate of Income Tax and announces changes to the Land and Buildings Transaction Tax

The Scottish Government set out tax and financial plans for the future in their draft Budget on 16 December 2015. The Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, John Swinney, announced that the Scottish Rate of Income Tax (SRIT) would be set at 10p in the pound for 2016/17.

The Scotland Act 2012 granted the Scottish Parliament landmark new powers to set a separate annual rate of income tax for Scottish taxpayers. The Scottish rate of income tax (SRIT) comes into effect in April 2016 and represents a fundamental change to the UK tax system.

Two types of income tax

Under the new regime, with effect from 6 April 2016 taxpayers who are deemed to be resident in Scotland will pay two types of income tax. The UK rates of income tax will be reduced by 10p for Scottish taxpayers, and the Scottish Parliament will levy the SRIT in its place. It has now been confirmed that the Scottish Rate of Income Tax (SRIT) will be 10 pence in the pound ensuring that overall tax rates will remain the same as in the rest of the UK.

The Scottish Parliament has the choice of whether to reduce or increase the SRIT beyond 10p, and there are no lower or upper limits. However, on this occasion the income tax rate has been frozen at 10p in the pound. Commenting on the decision, Mr Swinney remarked: ‘The simple fact is this tax power does not enable me to target help to those on the lowest incomes’.

What does SRIT apply to?

The SRIT will apply to most mainstream sources of income such as PAYE income, pensions, rental profit and profits from self-employment.

The SRIT does not apply to income from savings such as building society interest or dividends. These rates will stay the same for all taxpayers across the UK.

Who does the SRIT apply to?

Broadly, a Scottish taxpayer is someone who is UK resident for tax purposes and has one place of residence which is in Scotland.

Individuals who have more than one place of residence in the UK need to determine which of these has been their main place of residence for the longest period in a tax year. Individuals who cannot identify a main place of residence will need to count the days they spend in Scotland and elsewhere in the UK. If they spend more days in Scotland, they will be a Scottish taxpayer.     

It is intended that HMRC will contact potential Scottish taxpayers before April 2016. If the address which HMRC holds is in Scotland then the individual will be classed as a Scottish taxpayer.

Employers

Any employer in the UK will see a change to PAYE procedures if an employee is classed as a Scottish taxpayer. A special PAYE code, prefix S, will apply to Scottish taxpayers and will be notified to employers and pension providers by HMRC where appropriate.

However, there will be no substantive changes for employers as a result of SRIT. An employer will not have to make any assessments on taxpayer status. Employers should not change a tax code unless advised to do so by HMRC. PAYE software will need to be updated to cope with the new ‘S’ codes.

HMRC has recently advised that there is no requirement for employers to include the Scottish rate separately on the P60 (end of year certificate). However, the P60 should show a Scottish tax code where appropriate.

Land and Buildings Transaction Tax

As well as paving the way for the changes to income tax outlined above, the Scotland Act 2012 also resulted in the introduction of Land and Buildings Transaction Tax (LBTT) in Scotland, replacing the Stamp Duty Land Tax applying in the rest of the UK, as well as changes to the landfill tax regime in Scotland.

The draft Budget also introduces a LBTT supplement on purchases of additional residential properties, such as buy-to-let properties and second homes. This supplement will be 3 percentage points of the total price of the property for all relevant transactions above £40,000 and will be levied in addition to the current LBTT rates.

The Scotland Bill 2015 proposes the further devolution of additional tax and spending powers to the Scottish Parliament. The Scotland Bill 2015 is still subject to consideration and amendment by the UK Parliament.

Please contact us if you would like help with SRIT, including determining whether or not you are a Scottish taxpayer.

Internet links: Gov.UK SRIT Scotland.gov.uk/News

Reversal of most of the tax credit proposals

A number of changes to tax credits and Universal Credit were announced in the July Budget but the Chancellor has scrapped some of the changes following a defeat of the proposals by the House of Lords. The government has confirmed that:

• The rate at which a tax credit claimant’s award is reduced as each pound of their income exceeds the income threshold (known as the taper rate) will remain at 41% of gross income from April 2016.
• The level of income at which a claimant’s tax credit award begins to be tapered away (known as the income threshold), will remain at £6,420 per year from April 2016. Claimants earning below this amount will retain their maximum award.
• The income rise disregard in tax credits will reduce from £5,000 to £2,500. This is the amount by which a claimant’s income can increase in-year compared to their previous year’s income before their award is adjusted.

Changes to the prospective Tax-Free Childcare scheme

Under the scheme, which is expected to launch in 2017, the relief will be 20% of the costs of childcare up to a total of childcare costs of £10,000 per child per year. The scheme will therefore be worth a maximum of £2,000 per child (£4,000 for a disabled child).

The government has announced changes to the conditions to qualify for Tax-Free Childcare. All parents in the household must:

• meet a minimum income level based on the equivalent of working 16 hours a week at the National Living Wage (increased from eight hours at the National Minimum Wage)
• each earn less than £100,000 a year (reduced from £150,000), and
• not already be receiving support through tax credits or Universal Credit.

The Chancellor of the Exchequer, George Osborne, has announced that the government will publish its next Budget on Wednesday 16 March 2016.

Internet links: GOV.UK main tax announcements GOV.UK news

Retaining the 3% diesel supplement for company cars which was to be abolished

The scale of charges for working out the taxable benefit for an employee who has use of an employer provided car are now announced well in advance. Cars are taxed by reference to bands of CO2 emissions. From 6 April 2015 the percentage applied by each band went up by 2% and the maximum charge is capped at 37% of the list price of the car.

From 6 April 2016 there will be a further 2% increase in the percentage applied by each band with similar increases in 2017/18 and 2018/19. For 2019/20 the rate will increase by a further 3%. It had been expected that the 3% diesel supplement would be removed from 6 April 2016, however this 3% differential will now be retained until April 2021. This is a blow to diesel car drivers who were expecting to see their car benefit reduce from April 2016.

The introduction of an apprenticeship levy

The government will introduce the apprenticeship levy in April 2017. It will be set at a rate of 0.5% of an employer’s paybill, which is broadly total employee earnings excluding benefits in kind, and will be paid through PAYE. Each employer will receive an allowance of £15,000 to offset against their levy payment. This means that the levy will only be paid on any paybill in excess of £3 million.

Internet link: GOV.UK Blue Book

Higher SDLT on purchases of additional residential 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 three 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. The government will consult on the policy detail, including whether an exemption for corporates and funds owning more than 15 residential properties is appropriate. The Chancellor stated that ‘more and more homes are being bought as buy to lets or second homes’ and ‘frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy’.

No mention was made by the Chancellor on the position in Scotland. It is the Scottish Government which sets the rates for the equivalent tax on property – the Land and Buildings Transaction Tax.

The introduction of a payment on account of any CGT due on the disposal of residential property

From April 2019, a payment on account of any CGT due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal. This will not affect gains on properties which are not liable for CGT due to Private Residence Relief.

Currently, CGT is not payable on a disposal of an asset until 31 January following the tax year in which a disposal is made. So a disposal made on the 6 April 2016 will not result in a tax bill until 31 January 2018.

This measure is another blow for buy to let landlords.

Internet link: GOV.UK main tax announcements