Chancellor George Osbourne delivered his Autumn Statement to the House of Commons on Wednesday 3rd December 2014.  This is his final Autumn Statement before the 2015 General Election.

In summary:

Employment

The OBR expects employment to have risen by 500,000 in 2014.  Unemployment is forecast to fall to 5.4% in 2015 and to then settle at 5.3% and 5.6% by 2018.  This may impact on interest rates if the Governor of the Bank of England follows his forwards guidance on interest rates being linked to employment and wage growth.

Small Business Rate

Inflation linked increases in business rates will be capped at 2% and the discount for shops, pubs and cafes is increased by 50% to £1,500.

Stamp Duty

Stamp duty is to be reformed with removal of the 'slab' system.  The new system means that rates are charged only to the part of the property falling within each band:

0% in first £125,000

2% on the portion up to £250,000

5% up to £925,000

10% up to £1.5 million

12% on anything above £1.5 million

This new policy is estimated to save £4,500 on the average priced home.

This reform of Stamp Duty will save money for the 98% of homebuyers and is estimated to give a total tax cut of £800 million a year.

Charities

Hospice charities, search and rescue and air ambulance will be grated VAT refunds.

Income Tax

The personal tax allowance increased to £10,600 from April 2015 rather than the £10,500 previously announced.  The higher rate income tax threshold will rise to £42,385 next year.

Tax Anti-Avoidance and Evasion

The Chancellor announced ongoing measure to tackle tax avoidance, evasion, fraud and error.  This is expected to raise more than £2.8 billion.

Non-Domiciles

The Chancellor announced that the levy charges on non-domiciles is to be increased.  The levy charged of £30,000 on those who live in Britain for more than seven years whilst only paying UK tax on income brought into the country.

The Chancellor announced that those who have been in the UK for 12 our of 14 years will now pay £60,000 and for those who have been in Britain for 17 out of 20 years will pay £90,000.

"Envelope" Properties

The annual charge on properties 'enveloped' in order to avoid stamp duty will rise by 50% above inflation for properties over £2 million.

Business and Bank Taxes

Bank profits available for offset by losses for tax purposes will be limited to 50%, meaning banks will pay an additional £4 billion over the next five years.

R & D Tax Credits

The R & D tax credit is increased for small and medium sized companies to 230% and to 11% for large companies.

Oil and Shale Gas

There is an immediate reduction in the oil industry supplementary charge from 32% to 30%.

A new sovereign wealth fund has been set up to enable investment of proceeds from shale gas resources in the North of England to reinvest locally.

Tobacco, Alcohol and Fuel

Fuel duty increases have been frozen

Inheritance Tax

The inheritance tax exemption has been extended to include aid workers who die dealing with humanitarian emergencies.

Air Passenger Duty

Air Passenger Duty for children under 12 is abolished from May 2015 and abolished for under 16s from 2016.

Pensions and Savings

People dying aged under 75 will be allowed to pass on annuities tax free.  New ISA limits are increased to £15,240 per annum and ISAs can be inherited tax free.

 

We will be happy to speak to you if you require any further advice on any of the above topics.