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PwC Makes UK Autumn Statement Predictions

by Robert Lee,, London

23 November 2015

Professional services firm PwC has predicted that UK Chancellor George Osborne will introduce an "apprenticeship levy" and seek to lessen the impact of tax credit cuts when he delivers his Autumn Statement on November 25.

In his Summer Budget, Osborne pledged that the Government would "introduce an apprenticeship levy on all large firms," stating that "the money will be directly controlled by employers and we'll work with businesses on how to do this."

According to Chris Kirk, Education Partner at PwC, the Chancellor is likely to provide more information on the purpose and benefits of the scheme at the Autumn Statement. "Payment for the training is only a small part for employers, and there is a risk that more focus could be given to the cost of the levy and how to get that money back into the business, than on the training itself. It is important therefore to ensure the correct focus is given to the quality of apprenticeships and further clarity on the scope and rate of the Levy," Kirk said.

PwC does not however anticipate any major changes in the business taxes arena. Instead, it expects the emphasis to be on tackling tax evasion and avoidance, and for there to be an update on the base erosion and profit shifting (BEPS) agenda. Osborne could issue draft legislation for the implementation of new anti-hybrid rules, the firm said.

In addition, Osborne could clarify the Government's position on the taxation of non-domiciled individuals. The publication of draft legislation on proposed new remittance rules and the treatment of accumulated offshore income and gains has been delayed.

Alex Henderson, Tax Partner, said: "Any Chancellor looking to both make the UK an attractive place to work or live temporarily, as is the case with non-domiciled individuals, and raise tax revenue needs to strike a balance taking into account not only the rates of tax but the ease of interacting with the tax system. When non-domiciled individuals with complicated affairs interact with the UK's already complex tax system the result is rarely to anyone's advantage. It is to be hoped that we see some simplification of the system as part of the wider reform."

In the wake of the Government's recent defeat in the House of Lords over its tax credit reforms, PwC thinks it is likely that Osborne will seek to soften the impact of the plans by making changes to other parts of the tax system. Iain McCluskey, Tax Director, said: "The most obvious response to this pressure is for the cuts in tax credits to be slowed, or for tax credits for the lowest earners, say those earning less than GBP15,000 (USD22,735) per annum, to be protected from cuts."

McCluskey added that Osborne could potentially announce that new minimum pay levels are to rise, that the tax-free personal allowance will increase at a faster rate, or that the lower earnings limit for national insurance will be significantly increased. Osborne could also introduce a tougher regime for claiming travel and subsistence expenses for the self-employed and personal service companies, he said.

TAGS: individuals | tax | investment | business | value added tax (VAT) | training | Personal Tax | employees | budget | corporation tax | United Kingdom | tax credits | ministry of finance | tax authority | offshore | education | legislation | tax reform | services | Invest | Tax | BEPS

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