View all newsletters
Have the short, sharp Spear's newsletter delivered to your inbox each week
  1. Wealth
  2. Wealth Management
March 18, 2015updated 11 Jan 2016 2:40pm

Budget 2015: Instant expert reaction and analysis

By Spear's

Hugo Smith, Partner and leading private client lawyer, at Westminster law firm, Bircham, Dyson Bell.

On Deeds of Variation:

“The Chancellor of the Exchequer’s announcement that the Government will conduct a review on ‘the avoidance of inheritance tax through the use of deeds of variation’ is alarming. This would appear to be a knee jerk reaction by the Chancellor to the supposed controversy surrounding Ed Miliband’s family tax planning.”

“Deeds of variation are one of those rare parts of the tax system which actually help people and are not a tax avoidance tool. They merely allow beneficiaries to rearrange their inheritance from an estate in a tax efficient way, to use tax reliefs that would have been available to the deceased if they had taken proper advice during their lifetime.”

“The consequence of restricting the use of deeds of variation would be that the well advised save tax that the less well advised end up paying. When the last Conservative Government proposed restricting the use of deeds of variation in the late 1980s they swiftly backtracked when they realised the impact it would have.”

On reduced tax on savings:

“The announcement of a tax free allowance of £1,000 for savings income (£500 for higher rate tax payers) is welcome. One side-effect of this announcement is that tax on bank interest will no longer be deducted at source. This means that anyone with bank interest of more than £1,000 will have to file a tax return, even if they may not have had to do so before. We must hope that the Chancellor’s proposed new system for dealing with tax returns will prevent this becoming a burden for many taxpayers.”

On inheritance tax:

Content from our partners
How Flygreen is ascending into the future of private aviation
Stoneweg, Icona, and CBH Strengthen Partnership with Cromwell Acquisition, Adding €4 Billion AUM to Stoneweg
Why investors should consider investing in nature

“The most interesting news was an omission from the Budget: the proposal to introduce an additional inheritance tax allowance for the family home. This proposal would have been welcome news for thousands of home owners, particularly in London and the South East, who have found themselves pulled into the inheritance tax net by soaring house prices.”

“Complications could arise where a family has more than one home, or where the deceased was no longer living in the family home at their death, for example if they were in a nursing home. We can expect to learn more on how this would work when it is announced in the Conservative party manifesto.”

Dean Turner, Director Investment Office UK at UBS Wealth Management said:

“The biggest change to the fiscal outlook is the significant reduction in the projected surplus at the end of the next parliament. The message the chancellor wants to send here is that fiscal austerity will be less severe and end sooner – there is light at the end of the tunnel”.

“Overall this was pretty much a fiscally neutral budget – the chancellor didn’t take the recent improvement in the public finances and spend it, he kept the focus on fiscal prudence. The total giveaway was insignificant, and falls through the remainder of the next parliament”.

“The changes to the personal tax allowance and the higher rate band should be supportive for the consumer, as should the freeze on duty for petrol. Abolishing tax on the first £1,000 of savings will also support household incomes”.

“The Help to Buy ISA was a surprise move which could support the housing market and the home building sector”.

John Cassidy, tax investigation partner national audit, tax and advisory firm Crowe Clark Whitehill:

“This really does emphasise that anyone with something to declare needs to do so quickly. The new disclosure facility is to be based on penalties of at least 30% of the tax due, with no immunity from prosecution, whereas the current Liechtenstein Disclosure Facility provides for penalties as low as 10% and a guarantee of no prosecution. Those wishing to come forward now have less time to avail themselves of these more beneficial terms”

“Going forward, 92 countries have to date agreed to exchange information on bank accounts automatically every year. HMRC will receive a huge amount of data on offshore assets held by UK tax residents, such as details of bank accounts, investments and interests in overseas trusts. HMRC will therefore have plenty of data that was not previously accessible in order to investigate or challenge a person’s tax position in relation to those assets. To help with this, the government plans to invest £4 million in data analytics resource to maximise the yield.”

John adds:

“Additional resource has already been supplied in the form of a doubling of the size of the Specialist Investigation team at HMRC and the formation of specialist offshore investigations team. Adding yet more capability illustrates that HMRC is serious about this.”

“The message is clear – use the Liechtenstein Disclosure Facility before it is too late. It is far less stressful than a serious HMRC investigation and an experienced tax investigations practitioner will be able to guide clients smoothly through the process.”

Stacy Eden, Head of Property and Construction at audit, tax and advisory firm Crowe Clark Whitehill:

“We are facing a housing crisis: simply put, there are not enough homes to meet demand. We are particularly pleased to see recognition of this with the support of 20 housing zones enabling regeneration of brownfield sites for up to 45,000 new homes that are desperately needed.”

“The proposed creation of the London Land Commission will assist London in tackling one of the biggest challenges facing the city. However, the question remains as to whether these proposals will be enough to stem the housing deficit; it is estimated we need 250,000 new homes per year.”

“The shortage of housing in certain areas in the UK is unsustainable, and the action proposed to encourage development will boost employment in the construction sector, slow the growth in rent and house prices and ultimately benefit the tax payer.”

“The Government’s attempts to solve the housing crisis will no doubt be welcomed by generation Y who are struggling to get onto the property ladder. The help-to-buy ISA boasts a 25% savings top up on savings up to £12,000, helping first-time buyers realise the aspiration of buying their own home.”

“The Government had already announced the extension to capital gains tax to include non UK resident owners of UK residential property and applied ATED to properties worth more than £1m.”

“In addition, for contractors and subcontractors in the sector, there will be a number of changes to Construction Industry Scheme Reporting and also significant additional reporting requirements with regard to the use of agency staff.”

Chris Moorcroft, senior associate in the private client team at London law firm Harbottle & Lewis:

“Exchange of information and tax evasion remain high on the Government’s agenda. Announcing an earlier closure of more generous disclosure facilities in favour of a new, less generous one, the Government is forcing those with undeclared funds to come clean now or face the consequences. Given the combined effects of transparency, more enquiries and stiffer penalties, individuals with undeclared funds shouldn’t waste another moment.”

Tina Riches, national tax partner at Smith & Williamson, the accountancy and investment management group

Clamp down on evasion – time running out for using disclosure facilities

‘The government’s proposal to toughen sanctions for those who continue to evade tax is no surprise. What is more unexpected is the announcement to close the existing disclosure facilities for those with something to declare early. This is due to affect facilities such as the Liechtenstein Disclosure Facility (LDF) and Crown dependency facility, which will close at the end of 2015, instead of April and December 2016 respectively.

‘The main alternative will be the new tougher ‘last chance’ disclosure facility that will be offered between 2016 and mid-2017, with penalties of at least 30% on top of tax owed and interest. This will offer no immunity from criminal prosecutions in appropriate cases.

‘This is providing a very sharp twist of the arm to anyone still hesitating before coming forward; the alternative is likely to be a criminal conviction.’

Entrepreneurial Spark chief executive Jim Duffy welcomed Budget changes that will benefit start-up businesses but called for more to be done to support the fledgling firms:

‘Being able to pay tax at any point in the year and being able to spread the cost to the business through instalments will allow start-ups to manage their cash flow effectively.’

‘Digital tax returns are already used across much of Scandinavia, Norway and Denmark for example, where the change has been widely welcomed.’

‘More can be done to cut the red tape that remains as a barrier to start-ups but this is a good first step. Raising the VAT threshold from £81,000 to £100,000 would have been equally welcome, as that is a huge headache for countless businesses, but that is obviously one for the future.’

‘We will also continue to call for the creation of a Cabinet post for a Minister for Entrepreneurs. That would send a clear message that the Government recognises the achievements of a new generation of start-ups who are bringing billions of pounds into the UK economy, creating thousands of jobs and making a huge contribution to communities across the length and breadth of Britain.’

Rachel de Souza, Tax Director, RBC Wealth Management


“There were no further changes impacting non doms beyond those previously announced. However, we are already seeing a big impact from the increase in the cost of the annual remittance basis charge election. The election allows non doms to pay a fixed amount of tax on foreign income and gains, so long as these are not used in the UK. It is a good deal for the non dom, who can reduce the amount of UK tax due, but it is also good for the Treasury, because it encourages non doms to settle and pay tax here. Non doms who make the election still have to pay tax if they want to spend their money in the UK, so the arrangement does not allow individuals to avoid their UK tax obligations.

“The cost of making the annual election is set to rise sharply from 6 April 2015, with the top rate rising from £50,000 to £90,000, for long term residents. For many non doms we talk to, this sharp increase has made them reconsider the way they structure their wealth. I expect to see much less revenue being raised through the remittance election in future, with many non doms preferring to be taxed on income and gains when they are received.”

Stamp duty land tax and ATED

“The Annual Tax on Enveloped Dwellings (ATED) has been extended to apply to residential properties owned by a company and worth more than £1m from April 2015. Just as importantly, the annual tax charges involved are about to increase by more than 50%. For the ultra-wealthy, this increase is unlikely to be more than a minor irritant, but for many in the South East who have benefitted from strong growth in property prices, it represents a real dilemma.

“There can be a significant tax cost for anyone trying to remove a property from a company, especially if there is a mortgage in place. Originally, many of the people affected decided that it would be cheaper to grit their teeth and pay the annual charge rather than change ownership structures altogether and suffer a large immediate tax bill. The big increase in the annual ATED charge is forcing people to revisit this decision. The new charges, which start from a minimum level of £23,350 a year for properties worth more than £2m, will be difficult to meet for asset-rich, cash-poor families, and we are already hearing of properties being put on the market because their owners do not have the funds to pay the tax on them on an ongoing basis.”

Entrepreneur’s Relief

“The changes to entrepreneur’s relief announced by the Chancellor are intended to ensure that this valuable relief is only claimed by those who are genuinely selling their businesses rather than where a disposal is created artificially. We welcome a tightening of these rules to target the transactions it was intended to benefit rather than some of the increasingly artificial disposals that have been undertaken in more recent years.”

Lucy Brennan, partner in the private wealth group at Saffery Champness, comments:

‘Death of the tax return’

“I suspect there will still need to be some kind of annual catch-up point because our tax laws and tax rates are based upon yearly intervals. It is human nature to leave things to the last minute, and if people can, they will. In this respect, the system may mean little change for some people.”

“From an accounting point of view, there is a huge amount of detail that will need to be worked out. There is a perilous road ahead, particularly where people’s affairs are complicated.”

On tax evasion – criminal sanctions for professional advisers:

“This measure has seemed inevitable, but care must be taken to apply it fairly. Most people don’t realise that the tax avoidance industry on personal taxes has long since vanished and it is the historic schemes which are making the headlines.”

James Hender, partner and head of the private wealth group at Saffery Champness, comments on the review of deeds of variation:

“Such planning has been used by a whole variety of families over many years for good reasons. It would be shame if this useful tool is abolished just so that the Chancellor can embarrass the Opposition.”

On entrepreneur’s relief:

“The government has become concerned that Entrepreneurs’ Relief is being abused. It is good that the government is ensuring that the right people benefit, as the alternative would be to abolish the relief and throw the baby out with the bath water.”

Paul Latham, Managing Director at Octopus Investments, said of Changes to Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) legislation:

“We welcome the Government’s continued commitment to making the UK one of the best places to start, finance and grow a business in Europe and its recognition of the valuable role that tax-advantaged venture capital schemes like VCTs and EIS can play in achieving this by attracting investment into the sector. Today’s Budget once again highlights the value of these government approved initiatives and affirms the government’s continued commitment to them.

“As always, as a result of today’s legislative tweaks, there will be inevitably some companies that just miss out on funding that are on the cusp of the qualifying criteria. However, EIS & VCT have been and will continue to be a critical source of funding for UK smaller companies and high growth small businesses.

“As the largest provider of VCT and EIS in the UK we have been actively engaged with the government on the consultation and its discussions with the European Commission. We look forward to continuing to work with them, and the new industry forum announced today, to ensure EIS and VCTs can continue to support the next generation of UK business and smaller companies across the country that are contributing to our overall economic growth.”

Richard Wazacz, Business Line Manager for VCTs at Octopus Investments, said:

“It’s great to see the Government recognise the valuable role Venture Capital Trusts can play in supporting areas of the economy in need of investment. Octopus has been actively engaged with the Government during the consultation period to help provide insight into the market opportunity through our experience as the largest provider of VCTs in the UK. We do not currently have any plans to launch a dedicated social VCT but we will be keeping a close eye to see how the market develops over the coming year.”

Simon Airey, partner and Head of Investigations at global law firm DLA Piper, said:

“The Chancellor has reinforced HMRC’s commitment to aggressively target offshore tax evaders and their advisors through a well-constructed combination of legal and operational initiatives, specialist resources and anticipated access to data from numerous sources. The message is clear, time is running out for those taxpayers whom HMRC has not yet caught up with, including those investing in offshore schemes that may not stand up to HMRC scrutiny. Swift action is needed as opportunities do still exist to regularise tax affairs, including the favourable terms of the Liechtenstein Disclosure Facility.”

John Cridland, CBI Director-General, said:

‘Stability and consistency are what businesses need to grow and prosper. This Budget sets the tone, providing a clear plan for fiscal health and growth. This Budget has some encouraging measures to help businesses create jobs for the benefit of all. The brighter fiscal picture has allowed the Chancellor to recalibrate his deficit reduction plans. In the next Parliament this fiscal breathing space should be used to achieve intelligent reductions in public spending, together with much-needed infrastructure and innovation.

‘With business investment a crucial driver of growth, the Chancellor has signalled his intention to continue the Annual Investment Allowance. We want it to be made permanent in the Autumn Statement at £250,000 – this will fire the UK’s economic kiln by spurring smaller firms to invest in plant and machinery.

‘The reduction of the headline rate of Corporation Tax to 20% next month, is a meaningful step in making the UK the most competitive tax regime in the G20 and will help to attract investment. The oil and gas industry, which supports 450,000 UK jobs and is a major contributor to GDP, has been given a much-needed boost with the reduction to the supplementary charge and other incentives.

‘This will help address concerns over job losses and investment freezes, but pressures remain due to low oil prices.

‘Giving savers greater freedom over their pensions, including creating a secondary annuities market, boosts choice but after a period of flux what’s needed now is breathing space for the industry and consumers to get to grips with all the changes.’

Gary Richards, partner in tax team at Berwin Leighton Paisner, says:

“It is unfortunate that this Chancellor leaves a longer and more complicated tax system than the one he inherited. If he wonders why avoidance persists, he need look no further than the body of legislation that he and his predecessors have created. The more rules and exceptions to those rules there are, the more the scope for items to fall out of charge where they should not or for a double charge to be imposed unfairly. Corporate and individual taxpayers alike would hugely welcome a radical simplification of the UK’s outdated tax code.”

Responding to news of the new Help to Buy ISA, Lucian Cook, Savills UK head of residential research says:

‘The Help to Buy ISA is a further attempt to keep alive the aspiration of home ownership and help first time buyers overcome the deposit constraints that have been the biggest barrier faced since the credit crunch.

While it will be welcomed by prospective first time buyers, limiting the ISA to a £12,000 savings plan with a £3,000 government contribution should prevent a surge in house prices. It is more likely to help get buyers over the deposit hurdle in the lower value, lower growth markets of the Midlands and the North than say London and the South East, where significant constraints remain.

It is also likely to be welcomed by parents and grandparents by making first time buyers less dependent on the bank of Mum and Dad and more inclined to contribute some top up savings when children come looking for assistance to get on the housing ladder.

However, those first time buyers who are keen to lock into low interest rates and who have access to parental support are unlikely to commit to what is effectively a five year savings plan.’

James Ward, private client partner at the law firm Seddons:

“For most taxpayers with straightforward tax affairs, the extinction of yearly returns and the self-assessment process likely represents the proverbial manna from heaven. Laudable in its goal of simplification and efficiency, the move toward digital tax accounts could prove to release millions of taxpayers from what is clearly a cumbersome and, for most, overly complicated process. For those with more complex tax affairs, investments or sources of income, little will change when it comes to tax despite this newly heralded digital era.

“There are concerns which remain about the implementation of this new strategy, however. There is some risk involved in relying solely on HMRC to be responsible for the calculation and resolution of tax, particularly when we’re talking about millions of tax payers. In addition, HMRC doesn’t have the most flawless record when it comes to deploying IT solutions on a large scale. If poorly designed or implemented, this new reality could prove more of a headache than a help.”


“The proposed review of Deeds of Variation in relation to Inheritance Tax is a surprise, but may simply be an electioneering proposal following admission by Ed Miliband that he used one on his father’s estate. The immediate tax advantages of using such a Deed are minimal, especially following the introduction of the transferable nil rate band and, in practice they are mostly used to rectify omission or inequality in a will or skip a generation. With this in mind, if Deeds of Variation are abolished, it will be even more necessary for testators to keep their wills up-to-date, as their beneficiaries will not be able to rely on changing their wishes or their intestacy after death.

“Speculation also continues to swirl regarding further potential changes to inheritance tax in relation to the transfer of property. Although notably absent from today’s Budget announcements, the potential reduction of IHT liability related to the transfer of a primary home to a direct descendent would be welcomed by many. This is particularly true for the growing number of individuals for whom home ownership has been a primary source of wealth generation and preservation.

“However, the proposed method by which this change may occur is only likely to bring back intricacy and confusion to what is now a relatively simple tax system to manage. It would also bring added importance to owning a home at the date of death, which may not be practicable if care homes fees need to be paid. A much more streamlined – and arguably more equitable – approach would perhaps be to raise the nil rate band to £500,000. No doubt that the debate around the merits and costs of such changes is far from over.”

Debbie Wosskow, Chair of Sharing Economy UK, the UK’s sharing economy trade body praised these measures in today’s budget:

* The launch of two pilot ‘Sharing Cities’ in Leeds City Region and Greater Manchester in 2015-16, to trial local sharing initiatives in the areas of shared transport, shared public space, and health and social care
* Changes making it easier for individuals to sub-let a room and for non-residential properties to rent out their existing parking spaces
* Guidance to JobCentre Plus staff to signpost job-seekers to sharing economy opportunities and promoting the use of task-sharing sites to assist in starting a business, by working with the Start Up Loans Company
* Updating government procurement frameworks to include sharing economy platforms – and enabling government employees to use sharing economy solutions to book accommodation and transport when travelling on official business where this represents value for money

Wosskow said:

“I’m delighted that the Government has taken the Sharing Economy Report I issued last November so seriously – and that they have really listened, and taken real action on the back of the recommendations I made, particularly around changes to make it easier to share rooms and parking spaces. I am also impressed by the way in which Government has embraced the Sharing Economy internally as well, updating the government procurement frameworks to include sharing economy platforms and also allowing Government employees to use sharing economy solutions for accommodation and traveling. I also welcome today’s announcement that in 2015-2016 Leeds and Greater Manchester will be undertaking a ‘Sharing City’ pilot scheme, in which transport, shared office space, accommodation and skills are joined together and residents are encouraged to share.”

“The sharing economy is a key area of growth for the UK, and we are leading the way regarding how to handle and manage this exciting sector. I look forward to the implementation of these promises, and to continuing to work closely with the Government.”

Neal Todd, partner in the tax team at law firm Berwin Leighton Paisner, says:

On simplification

“George Osborne emphasized the importance of simplifying the tax system repeatedly in this Budget. A number of measures to simplify personal tax administration were announced but businesses will see nothing comparable. In fact, the new anti-avoidance measures and the new diverted profits tax make the UK tax system more complex for business.

“What the Chancellor has failed to recognise is that avoidance arises out of complexity. He says he wants taxes to be simpler for everyone but his measures belie his words.”

Google tax/diverted profits tax

“Any narrowing of the scope of the diverted profits tax would be welcome but the real concern is that it is being smuggled into the pre-election Finance Act. That such a complex and far reaching new tax is introduced after only a couple of days of Parliamentary scrutiny is a dereliction of duty by MPs. On the other hand, if it is not introduced this side of the election businesses all over the world will be left guessing what their UK tax obligations will be when the new tax takes effect in April.”


“The pressure remains to take a tough stance on anti-avoidance but the constant stream of new legislation is becoming counter-productive. Companies now err on the extreme edge of caution and avoid even the legitimate tax breaks introduced to encourage certain types of behaviour such as investing in more energy-efficient equipment. There is a need to correct the misconceptions on tax planning; it cannot be that rational business considerations come into the firing line.”

Andy Cumming, Head of Wealth Management at Close Brothers Asset Management, comments on the potential re-sale of annuities: “Increased financial freedom at retirement has been a crucial step forward in the last year, but the Chancellor has fired the starting gun on the resale of annuities before we have seen the impact of last year’s reforms. It is a natural progression from the last Budget’s changes, and for thousands of annuitants, the move will be beneficial. However, it will be vitally important that there will be sufficient guidance for those looking to sell – especially if their current annuity is still the best option, providing value for money and supporting retirement goals. Equally, the cost and risk involved in selling an annuity must be made crystal clear to retirees. With questions still unanswered over how Pension Wise will operate and match the predicted demand for April’s freedoms, let alone further changes, much more clarity on the support and protection consumers will receive is necessary.”

Commenting on the tax avoidance and evasion measures and ‘death of the annual tax return’ in the 2015 Budget, Dawn Register, partner, Tax Dispute Resolution, BDO, said:

Tax avoidance and evasion

‘The Chancellor made a big fanfare for further measures to tackle tax evasion and avoidance, including a new criminal offence and new penalties for those who assist tax evaders and more Accelerated Payment Notices issued to raise an additional £3.1 billion from tax avoidance. HMRC currently win 80% of the avoidance cases through the courts allowing the Chancellor to be more bullish about using this area to raise further cash.

‘The Budget also includes ‘back-slapping’ from the Chancellor that, due to efforts of this Government, tackling international tax evasion is now at the top of the G8 agenda. Legislation next week will herald the introduction of the Common Reporting Standard which will bring global automatic information exchange a step closer. This will greatly assist HMRC in tracking down tax evaders and investigating those who hide assets offshore. It will also provide data on company profits held in other jurisdictions and will include non-UK domiciled individuals. It is a ‘game changer’ for all tax authorities in the pursuit of further tax revenues.’

‘Death of the annual tax return’

‘The Chancellors announcement of the ‘death of the annual tax return’ is rather premature. Many individuals and businesses with complex tax affairs will want to continue filing annual tax returns for many years to come. The estimate that this will be introduced in 2016 seems overly ambitious given the huge amount of infrastructure that still needs to be put in place. There will also be genuine concerns about the security of IT, the ability of HMRC to get accurate data flows and how people can correct inaccuracies. Education and training will be required for this fundamental change to be effective.’

‘However it is a positive development in the modern world where many people want to access data electronically on a 24/7 basis. This is on-line banking with HMRC and is part of the long term digital strategy.’

Nancy Curtin, Chief Investment Officer of Close Brothers Asset Management, comments: ‘With the general election just around the corner, who can blame the Chancellor for highlighting the strides the UK economy has taken? Plan A has clearly worked. The public finances are in much stronger shape, and the forecast for borrowing is coming down. The economy is moving in the right direction, and plunging oil prices and low inflation have helped boost consumer spending, feeding through into increased VAT receipts.”

‘All of this has given Osborne a little more fiscal leeway to take positive steps, without compromising on austerity. On the personal tax side, the increased personal allowance and greater financial freedoms for pensioners will be welcomed by many households. However, economically speaking the pre-announced move to broaden the recovery through infrastructure investment and greater economic powers for northern cities should provide added impetus, as will the additional support for the housing market. SMEs, so crucial to the labour market and the country’s growth, will be buoyed by the business rates review. All of this is positive for the UK’s outlook.’

Select and enter your email address The short, sharp email newsletter from Spear’s
  • Business owner/co-owner
  • CEO
  • COO
  • CFO
  • CTO
  • Chairperson
  • Non-Exec Director
  • Other C-Suite
  • Managing Director
  • President/Partner
  • Senior Executive/SVP or Corporate VP or equivalent
  • Director or equivalent
  • Group or Senior Manager
  • Head of Department/Function
  • Manager
  • Non-manager
  • Retired
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
Thank you

Thanks for subscribing.

Websites in our network