Autumn Statement – A summary of the key points

Following George Osborne delivery of  his Autumn Statement, we look at some of the key areas which are likely to impact many of us

INCOME TAX
The personal allowance will rise to £10,000 for the 2014/15 tax year. It will then increase by the Consumer Prices Index (CPI) measure of inflation in future years, starting from 2015-16.

In 2014-15, the 20% basic rate of income tax will apply to a narrower band of taxable income – £10,000 to £41,865 – which means that the 40% higher rate of income tax will be payable on income of £41,866 and above.  In subsequent years, this threshold will only go up by 1% a year, which will put more people into the higher rate.

MARRIED COUPLES ALLOWANCE
It has been proposed that from the 2015/16 tax year £1,000 of personal allowance could be transferred from one spouse to another, assuming neither is a higher-rate taxpayer and one is earning less than the personal allowance.

PENSIONS
The current state pension is £110.15 a week. This will increase would take it to £113.10 – a rise of £2.95 from April 2014.

There are proposals to increase the state pension age is to 68 in the mid-2030s and to 69 in the late 2040s. 

SAVINGS
The maximum allowance that could be saved in a tax-free Individual Savings Account will increase from the current £11,520 to £11,880 in April 2014.  Half of this can be saved in a cash Isa, with the rest or the total amount able to go into a stocks and shares Isa.

MOTORING
As in many Budgets of recent years, a fuel duty increase planned for this autumn was cancelled .  The next fuel duty rise (scheduled for September 2014),  will also be cancelled, saving drivers two pence a litre.

The paper tax disc to show motorists have paid their road tax will be replaced by an electronic system from October 2014. 

PROPERTY
From April 2015, capital gains tax will be imposed on future gains made by non-residents who sell residential property in the UK.

For UK residents, the last three years before selling a second home is disregarded when it comes to calculating a CGT bill at present. However, that period will now cut to 18 months, assuming they once lived in the property.

SMALL BUSINESSES
Business rate rises would be limited to 2% in England and Wales next year instead of being linked to inflation.

Business rate relief for small firms will be extended until April 2015.

A discount of up to £1,000 against business rates bills for retail premises (including pubs, cafes, restaurants and charity shops) with a rateable value of up to £50,000 in 2014-15 and 2015-16, (guidance on how the discount will be applied to be provided).

A temporary reoccupation relief, granting a 50% discount from business rates for new occupants of previously empty retail premises for 18 months, to help reduce the number of boarded up shops on English high streets. The relief will be granted to businesses moving into long-term empty retail properties on or after 1 April 2014 and on or before 31 March 2016

Employers will also get a break from National Insurance contributions when employing younger workers. At present it kicks in at the age of 16, but it will now be delayed to 21.

 EMPLOYEE OWNERSHIP
Relief from capital gains tax on disposals of shares that result in a controlling interest in a company being held by a trust used as an indirect employee ownership structure

An annual exemption from income tax on bonuses or equivalent payments up to an amount of £3,600 paid to employees of companies that are indirectly employee owned

An increase in the maximum annual value of shares that an employee can acquire with tax advantages under the Share Incentive Plans to £3,600 a year for ‘free’ shares and to £1,800 a year for ‘partnership’ shares. The Save As Your Earn savings contribution limit will be doubled from £250 to £500. This will be the first increase for these schemes in over a decade.

OTHER
Stamp duty on shares purchased in exchange traded funds is to be abolished.

From April, a new tax relief is to be introduced for investment in social enterprises and new social impact bonds. The relief will be available for equity and certain debt investments in charities, community interest companies and community benefit societies to help them become self-sustaining in the long term.  Relief on social impact bonds will be given where the special purpose vehicle is structured as a company limited by shares.

For more detailed analysis of all the proposals please click here for the full Autumn Statement document

If you have any questions on how the Autumn Statement will affect you contact our Tax Team on 0161 249 5040