Non-doms, sacrificed salaries and more unpopular ombudsman decisions dominated another week in news.
Presumably after the bank holiday people will be back manning the product pumps and ranting about regulation again, but until then, here are the key themes:
1. Closing offshore loopholes
The Treasury began final consultation on the new rules to prevent those non-domiciled in the UK from sheltering their UK residential property from the taxman, due to come into force next year.
Following their announcement in last year’s summer Budget, the government has been working on the details, with the latest documentation stating the changes would bring an end to permanent non-dom status for tax purposes.
Chartered accountants Blick Rothenberg argued the reforms should be delayed until 2018 however, so they can be carefully considered and fixed for the long-term.
“The original announcement was made over a year ago so the government has had ample time to get the rules in order, and to leave such an important measure on the backburner for such a length of time is disappointing,” commented partner Nimesh Shah.
Meanwhile, HM Revenue & Customs attempted to clarify a few points in its own non-dom statutory residence test, although tax advisers have suggested some rules are no clearer.
The following day, HMRC proposed that those who do not come forward and pay outstanding taxes from offshore investments and accounts could face even tougher penalties, as it prepared to start receiving more data on such accounts in the Crown Dependencies and Overseas Territories.
Another consultation laid out plans which would mean these people could face of up to three times the tax they try to evade, whilst increasing their risk of potential criminal charges.
2. Salaried staff at a disadvantage
Earlier this month, FTAdviser covered the fact that HMRC is planning to limit any tax and national insurance contributions savings made from salary sacrifice schemes.
At the start of this week, RSM tax partner Andrew Hubbard pointed out that the changes risked putting employees at a disadvantage, explaining that if an employer can allow an employee to choose from a range of flexible benefits at the start of employment without any adverse tax consequences, why shouldn’t an existing employee be allowed to do so also?
“There is little logic in the proposal to remove the tax and NIC advantages of providing some benefits through salary sacrifice, whilst leaving others untouched,” he stated.
3. Losing bonuses, losing jobs
This week saw two employee announcements at either end of the spectrum.
Up in the rarified air of fund management, Neil Woodford’s firm has permanently abolished staff bonuses, claiming such incentives can be a “distraction”.
A spokesman confirmed that all employees - including fund managers, traders, analysts and sales staff - have been affected by the company’s rule change. If you were starting to feel sorry for them, bear in mind Mr Woodford also decided to increase salaries this year to ensure staff were not worse off on average under the new regime.
