George Osborne, the Chancellor of the Exchequer, announced his Autumn Statement on Wednesday (3 Dec 2014) in what could be seen as a mini budget. Here we focus on the key announcements, concentrating on those relating purely to taxation, as it is those which affect you, our customers, most directly.
1). First some good news: The UK is seeing the fastest growth out of all the G7 countries, and the number of people employed is at its highest point ever. This is good for all of us because it restores optimism in the UK economy, higher employment speaking for itself.
2). As we announced in a separate blog post, Stamp Duty (Land Tax) has been given a major shake-up and, for anyone buying a house for £935,000 or less, the amount of Stamp Duty which they’ll have to pay will be less, and sometimes very significant. See our separate blog post and infographic for more detail.
3). In the financial year 2015-16, the tax-free personal allowance (which is the amount you can earn before you start to pay any tax) will increase to 10,600 which is an increase of £600. So … more tax-free money in your pocket, which is good.
4). Economy flights will become cheaper for under 12s from 1 May 2015 and under 16s from 1 March 2016, because their tickets will become exempt from tax on those dates. So … a small concession, but another welcome one. Average 4-person families will save £26 for flights within Europe and £142 on flights to the U.S.
5). From 3 December 2014, spouses will be able to inherit their partner’s ISA benefits should their partner pass away. Currently this is not the case and the change will mean that, from 6 April 2015, the surviving spouse or civil partner will be able to invest what their partner would have invested, had they survived, as well as their own ISA allowance. We think this is a fair deal!
6). Help for small businesses on the High Street: The ‘High Street Discount’ for rates will increase to £1,500 from £1,000 between April 2015 and March 2016. The annual increase in business rates will also continue to be capped at 2% between the same dates. This is in addition to the continued doubling of the Small Business Rate Relief for another year. Transitional arrangements for small properties will also be extended to alleviate the increase in bills following the ending of ‘transitional rate relief’. These measures combined will help hundreds of thousands of small businesses.
7). Employers will welcome the news that, from April 2016, there will no longer be any National Insurance contributions (NICs) to pay on apprentices aged under 25 (other than for the very highest earners).
8). From April 2015 the government will levy a 25% tax on those large multinational companies who do a lot of business in the UK but divert profits abroad to avoid paying taxes here. Known as the ‘Diverted Profits Tax’ it will partly recoup taxes otherwise lost through the use of complicated business structures used to funnel profits abroad. This is great news for the economy.
9). Losses incurred by some banks during the financial crisis and mis-selling scandals have been used to eliminate corporation tax payment on current profits. This is a scandal and would have continued, in many cases, for a further 15 to 20 years. Clearly this is unsustainable for the economy and so the Chancellor has introduced a 50% limit on the amount of losses which can be carried forwards.
Other announcements included extra funding for the NHS, favourable loan arrangements for under 30s attending postgraduate masters courses, investment into science and research, infrastructure investments and improvements, tax reliefs for investments into children’s TV, a massive investment into a ‘Northern Powerhouse’ (including HS3, infrastructure and broadband improvements) and finally VAT refund eligibility for Search & Rescue and Air Ambulance charities as well as the hospice sector.
The full transcript of the Autumn Statement 2014 can be viewed here.
If you require clarification of these or any other tax issues, simply contact us here at Taxfile and we can set up a free initial consultation at one of our South London offices (Tulse Hill or Dulwich), without obligation. We are experts in all matters relating to tax and can help with anything from a simple tax return to full accounting and bookkeeping for small and medium sized businesses, also offering services like payroll, VAT, Company Register and RTI facilities and consulting on highly complex tax issues. We are also specialist accountants for landlords, sub-contractors working in the construction industry and taxi drivers or those making a living from driving.