Under the proposed apprenticeship levy (to be introduced from April 2017), employers will receive a government payment equal to 10% of their monthly apprenticeship levy contributions that will be available for them to spend on apprenticeship training. Further details are expected in April 2016 and the government will amend the draft Finance Bill 2016 legislation implementing the levy (see Legal update, Draft apprenticeship levy legislation published) to include the measure.

(2016 Budget Report, paragraphs 1.98, 1.99 and 2.243 and HMRC Overview, paragraph 1.56.)

Practical Law Tax is tracking the apprenticeship levy in Tax legislation tracker: employment: Apprenticeship levy.

Some benefits are taxed on the basis of rules that specify the amount of the taxable benefit. These include living accommodation, cars, vans and related benefits, and beneficial loans. The rest are taxable on the cost to the employer of providing the benefit. In the latter case, if the employee reimburses the employer the cost of providing the benefit, there is no tax to pay as the employee has made a fair bargain. Legislation will be introduced in the Finance Bill 2016 to put beyond doubt that the fair bargain concept does not apply to the above-mentioned benefits. The taxable amount will be calculated in accordance with the specific rules, less any contribution made by the employee. The measure will take effect from 6 April 2016.

(2016 Budget Report, paragraph 2.36 and HMRC: Income Tax: preventing liability to charge being removed from certain taxable benefits in kind.)

For a discussion about the taxation of employee benefits, see Practice note, Taxation of employees: benefits and expenses.

Employers will be denied the national insurance contributions (NICs) employment allowance for a period of one year if they are subject to a civil penalty for employing illegal workers. This measure will be introduced by regulations and will apply from tax year 2017 to 2018 with exclusions coming into force from 2018 to 2019.

(2016 Budget Report, paragraph 2.24 and HMRC Overview, paragraph 2.66.)

For information on the NICs and the employment allowance, see Practice note, Taxation of employees: National insurance contributions.

The government has announced that it will abolish Class 2 NICs with effect from 6 April 2018. This follows a consultation, on which the government will publish its responses shortly, that was based on recommendations from the Office of Tax Simplification. The government will set out details of how the self-employed will access contributory benefits when Class 2 NICs are abolished.

At present, self-employed individuals pay both fixed rate Class 2 contributions and Class 4 contributions that are based on their business profits. (For developments to date, see Tax legislation tracker: owner-managed business: Abolition of Class 2 NICs and reform of Class 4 NICs.)

(2016 Budget Report, paragraphs 1.166, 1.167, 2.23, HMRC Overview, paragraph 2.65, HM Treasury: Business tax road map, paragraph 2.24 and Policy Costings, page 31.)

Property that is non-residential, or has a mix of residential and non-residential use is charged to stamp duty land tax (SDLT) at different rates from residential land.

Originally, SDLT was charged on all properties under a "slab" system, under which SDLT was levied at a single rate based on the chargeable consideration for a transaction. Following the 2014 Autumn Statement, this approach was changed for residential properties to a "slice" system, under which SDLT is charged at a variety of rates according to the portion of the total consideration falling within each of several bands. This change took effect on 4 December 2014, subject to some transitional provisions. For more information, see:

The government has announced in the 2016 Budget that a similar "slice" approach will apply to non-residential and mixed properties for transactions with an effective date on or after 17 March 2016.

The SDLT rates applicable to non-rent consideration from that date are:

This means that transactions with non-rent consideration of over £1.05 million will be subject to more SDLT under the new system than they were under the old system.

The government has also announced changes to the SDLT rates in respect of leases of non-residential or mixed residential and non-residential properties, introducing a new 2% band for rents with a net present value of over £5 million.

For more information on how SDLT is calculated for leases, see Practice note, SDLT and the grant of a lease.

These changes to SDLT apply in England, Wales and Northern Ireland.

Buyers may elect to pay SDLT under the old rules in either of the following cases:

(2016 Budget Report, paragraphs 1.179-1.183, 2.186 and HMRC: Policy paper: Stamp Duty Land Tax: reform of charging provisions for non-residential property.)

The 2015 Autumn Statement and Spending Review announced a surcharge of 3% on SDLT in respect of purchases of "additional residential properties", such as buy to let properties and second homes, with a value above £40,000. This surcharge was to apply from 1 April 2016. For more information, see Legal update, 2015 Autumn Statement and Spending Review: key agriculture and rural land announcements: SDLT surcharge on "additional" residential properties.

In December 2015, the government launched a consultation on the additional 3% charge, see Legal update, SDLT consultation on higher rates for additional residential properties.

The 2016 Budget confirms that the surcharge applies from 1 April, subject to transitional measures. The higher rates of SDLT will apply in England, Wales and Northern Ireland.

The government has made some changes to its original proposals, in the light of the responses made to the consultation. Among these changes are:

Where the surcharge applies, the SDLT rates for a transaction will be 3% above the current SDLT rates for residential property. This means that the following rates will apply on a progressive "slice" basis (see Practice note, SDLT and residential property):

*If the chargeable consideration is less than £40,000, the additional 3% SDLT charge will not apply. However, if the chargeable consideration is £40,000 or more, the total amount (up to £125,000) will be chargeable at 3%.

(2016 Budget Report, paragraphs 1.125, 1.126 and 2.183, HMRC: Stamp Duty Land Tax: higher rates for purchases of additional residential properties and HMRC: Stamp Duty Land Tax: buying an additional residential property).

The government will provide £60 million from the revenue raised from higher rates on additional residential properties to enable community-led housing developments (including through Community Land Trusts) in rural and coastal communities where the impact of second homes is particularly acute. The South West will receive around £20 million of this funding.

(2016 Budget Report, paragraphs 1.127 and 2.183.)

As announced at the 2015 Autumn Statement and Spending Review, the scope of the reliefs available from these charges will be extended where a residential property is:

For more information, see Legal updates, 2015 Autumn Statement and Spending Review: key property announcements: Reliefs from the 15% rate of SDLT, 2015 Autumn Statement and Spending Review: key agriculture and rural land announcements: Annual Tax on Enveloped Dwellings (ATED) and Draft Finance Bill 2016 legislation: key business tax measures.

The government has announced that it has made some minor technical changes to the draft legislation, following consultation. The revised wording is expected to be contained in the Finance Bill 2016 and the changes will come into effect from 1 April 2016.

(2016 Budget Report, paragraph 2.185 and HMRC Overview, paragraph 1.61.)

The Finance Bill 2016 will repeal the wear and tear allowance and replace it with a new relief allowing landlords to deduct the actual costs of replacing furniture, furnishings, appliances and kitchenware in a let dwelling when calculating their tax liability.

This measure was first announced in the July 2015 Budget (see Legal update, July 2015 Budget: key agriculture and rural land announcements: Wear and tear allowance to be replaced with new relief for actual costs).

The new relief will apply to expenditure incurred on or after 1 April 2016 for corporation taxpayers and 6 April 2016 for income taxpayers. The relief will apply to expenditure incurred on an item that is substantially the same as the item being replaced and on costs incurring in disposing of, or less any proceeds received for, the item being replaced.

The government has announced that, following technical consultation, the draft legislation will be amended so that:

(2016 Budget Report, paragraph 2.28 and HMRC Overview, paragraph 1.23.)

There will be a permanent increase in Small Business Rate Relief (SBRR) from 50% to 100% and an increase in the current thresholds to benefit a greater number of businesses. This means that in England from 1 April 2017:

There will also be an increase in the rateable value threshold for the standard business rates multiplier to £51,000 from 1 April 2017, taking more properties in England out of the higher rate.

Although agricultural land and agricultural buildings are exempt from business rates, the agricultural definitions are detailed and narrow, so business rates will apply in some circumstances.

(2016 Budget Report, paragraph 1.161.)

The government is cutting the higher rate of capital gains tax (CGT) from 28% to 20% and the basic rate from 18% to 10%. This will take effect for disposals made on or after 6 April 2016. However, the old rates will be kept in place for chargeable gains on residential property. Private residence relief will remain so that an individual’s main home will not be subject to CGT.

As announced in the 2015 Autumn Statement, the government will amend the CGT computations required by non-residents on the disposal of UK residential property by removing, with retrospective effect from 6 April 2015, a double charge that occurs in some circumstances and correcting an omission with effect from 25 November 2015.

The government is also making the submission of a non-resident capital gains tax (NRCGT) return following a disposal of a UK residential property interest by a non-resident optional in two specific circumstances. This relaxation will be backdated to 6 April 2015. For more information, see Legal update, Non-resident CGT: reporting to be made optional in prescribed circumstances.

(2016 Budget Report, paragraphs 1.171 and 2.194.)

The main rate of corporation tax for non-ring fenced profits will reduce to 17% for the financial year commencing 1 April 2020. The rate will be implemented by the Finance Bill 2016.

The government has promised to keep rates of corporation tax under review as it considers rates to be a key element that drives growth and investment.

For information on corporation tax, see Practice note, Corporation tax: general principles.

(2016 Budget Report, paragraph 2.83, HMRC: Corporation Tax to 17% in 2020 and HM Treasury: Business tax road map, paragraphs 2.11-2.13.)

Individuals who are reducing their participation in a family company or partnership and, at the same time selling to a family member a privately-owned asset that has been used in the business, will not be prevented from claiming Entrepreneurs' relief (ER) on the associated disposal. The proposed change will be backdated to 18 March 2015 so that the changes introduced by the Finance Act 2015 (FA 2015) will not prejudice genuine retirements from a family business.

ER is available on an associated disposal where a partner is disposing of at least a 5% share of the partnership or 5% of the shares in a family company of which he is a director or employee. The FA 2015 changes denied relief if the disposal of the share in the partnership or shares in the company was to a family member (see Practice note, Entrepreneurs' relief). Finance Bill 2016 amendments will remove the anomaly and will also allow relief where the individual is retiring completely, the shareholding or partnership share disposed of is not 5% but represents what remains of a previously qualifying holding.

The government has listened to feedback from taxpayers and professional bodies on the unfairness of the FA 2015 measure and has acted accordingly.

(2016 Budget Report, paragraph 2.189 and HMRC: Capital Gains Tax: changes to rules to extend availability of Entrepreneurs' Relief on associated disposals.)

As announced in the July 2015 Budget, the government has confirmed that measures will be included in the Finance Bill 2016 to extend the inheritance tax residence nil rate band to estates where the deceased downsized to a less valuable property or ceased to own property on or after 8 July 2015 and assets are passed to lineal descendants on death.

Following consultation, the draft legislation, which was published on 9 December 2015, will be revised to clarify when a disposal has occurred, to ensure that certain disposals made by trustees will also be taken into account, and to ensure that the provisions relating to cases involving conditionally exempt assets work as intended.

(2016 Budget Report, paragraph 2.26 and HMRC Overview, paragraph 1.53.)

For more information see Private client tax legislation tracker 2015-2016: IHT: residence nil rate band: downsizing.

As announced in the 2015 Autumn Statement, from April 2016 self-employed farmers will have the choice of averaging their profits for income tax purposes over two years or five years.

(2016 Budget Report, paragraph 2.32.)

For more information, see Practice note, Income tax for farmers: Farmers' profit averaging.

The government will consult on the tax treatment of partnerships, including how partnerships calculate their tax liabilities. This follows on from the Office of Tax Simplification's review into partnership taxation, which highlighted uncertainties in the rules (see Practice note, Partnerships: tax: Simplification of partnership taxation). Any legislation will be included in a future Finance Bill.

(2016 Budget Report, paragraph 2.109 and HMRC Overview, paragraph 2.13.)

From 2018 businesses, self-employed individuals and landlords who are keeping records digitally and providing regular digital updates to HMRC will be able to pay their tax bills "as they go" to better manage their cash flow. HMRC will consult on this proposal and the other elements of the government's making tax digital proposals (as to which, see Legal update, Digital tax accounting: HMRC vision to transform tax administration by 2020) later in 2016. The consultations will cover the use of digital tools to keep records and report information to HMRC, options to make greater use of third party data to prepopulate digital tax accounts and changes to the tax administration framework to reflect the transition to digital. Responses to these consultations will be published at the 2016 Autumn Statement and draft legislation will be included in the Finance Bill 2017.

The government will also explore options to simplify the tax rules for these groups, and will provide support to businesses. In particular, the government will:

To track these developments, see Tax legislation tracker: compliance, disputes and investigations: Digital tax accounts.

(2016 Budget Report, paragraphs 1.184, 1.185 and 2.212, HMRC Overview, paragraphs 2.55 and 2.56 and HM Treasury: Business tax road map, paragraphs 2.71, 2.72 and 2.74-2.76.)