A summary of the Autumn Statement 2014

We have put together the main points below following Chancellor George Osborne’s 50 minute speech yesterday. He used the Autumn Statement to reiterate his central message that a rebalanced UK economy will thrive through a commitment to business support, and investment in science and infrastructure.

He drew attention to the UK economy’s 3% growth this year, ahead of many other leading economies, but repeated an earlier warning from David Cameron that “the warning lights are flashing” with recession in Japan and stagnation in the Eurozone.

State of the Economy

  • UK is the fastest growing economy in the G7
  • 3% growth forecast in 2014, up from 2.7% predicted in March
  • 4% growth forecast in 2015, followed by 2.2%, 2.4%, 2.3% and 2.3% in the following four years
  • 500,000 new jobs created this year. 85% of new jobs full-time
  • Unemployment set to fall to 5.4% in 2015
  • Inflation predicted to be 1.5% in 2014, falling to 1.2% in 2015

Stamp Duty

  • Reform of residential propertystamp duty so that rates apply only to that part of the property price that falls within each band
  • 0% paid for the first £125,000 then 2% on the portion up to £250,000
  • 5% up to £925,000, then 10% up to £1.5m; 12% on anything above that, saving £4,500 on average priced home
  • Changes to come into effect at midnight on Thursday, 4th December

Public Borrowing Deficit

  • Deficit ‘cut in half’ since 2010
  • Borrowingset to fall from £97.5bn in 2013-14 to £91.3bn in 2014-15.
  • Deficit projected to fall to £75.9bn in 2015-6, £40.9bn in 2016-7, £14.5bn in 2017-8 before reaching a £4bn surplus in 2018-9
  • By 2019-20 Britain will have a surplus of £23bn
  • Debt as a share of GDP to rise from 80.4% this year to 81.1% next year, before falling in every year, reaching 72.8% in 2019-20
  • World War One debt to be repaid
  • Tax receipts up to 2017-18 to be £23bn lower than forecast 

Energy & Fuel

  • Fuel dutyto be frozen
  • Sovereign wealth fund for north of England to keep benefits of shale gas exploration
  • Immediate reduction inoil industry supplementary charge from 32% to 30% 

Savings & Pensions

  • Spouses will be able to inherittheir partners’ ISAs tax free upon their death
  • ISA threshold increases from £15,000 to £15,240 next April
  • Tax free annuities for dependents of people who die under 75
  • Commitment to complete public service pension reforms, saving £1.3bn a year 

Personal & Business Taxation

  • The R&D enhancement relief for small and medium companies to 230% and the R&D credit for large firms to 11%
  • Entrepreneur’s relief is no longer available on the gains arising on the disposal of goodwill as a result of incorporation with effect from 3rd December 2014. The corresponding goodwill write off in the limited company will no longer be a tax deductible expense
  • Air Passenger Dutyto be scrapped for under-12s from 1 May next year and for under-16s the following year
  • Personal tax allowance to increase to £10,600 next April
  • Inheritance tax to be cut for families of aid workers who die in course of their work
  • 55% death tax passed on to loved ones abolished
  • Libor fines to support Gurkhas and other service veterans and their families
  • Higher rate income tax threshold to rise to £42,385 next year
  • VAT paid by hospices andsearch and rescue organisations to be refunded
  • Introduce 25% tax on profits generated bymulti-nationals that are shifted out of the UK, set to raise £1bn over five years
  • Bank profits which can be offset by losses for tax purposes to be limited to 50%
  • New £90,000 charge for non-doms resident in the UK for 17 of the past 20 years
  • Inflation-linked increase in business rates capped at 2% 

Welfare

  • Welfare spending to be £1bn lower than forecast in March
  • Two year freeze in working-age benefits (first announced in October)
  • Migrants to lose unemployment benefits if they have “no prospect” of work after six weeks

Health & Education

  • £2bn extra every year until 2020 for the NHS
  • GP services to get £1.2bn in extra funds from bank foreign exchange manipulation fines
  • £10,000loans for postgraduate students studying for masters degrees
  • Employment Allowance worth £2,000 extended to carers

Business & Science

  • Business rates to be reviewed
  • Theatre tax break extended to orchestras and new tax credit for children’s TV producers
  • Research and development tax credit increased for small and medium-sized (SMEs) firms
  • Support extended tosmall businesses with £500m of bank lending plus £400m government-backed venture capital funds which invest in SMEs
  • £45m package of support for exporters
  • Expand tax relief on business investment in flood defences
  • Britain awarded the lead role in the international effort to exploreMars
  • National Insurance on young apprentices abolished

Housing, Infrastructure, Transport & Culture

  • £2bn forflood defence schemes in England
  • Tendering forNorthern Rail and Trans-Pennine Express franchises to replace pacer carriages with modern trains
  • A £78m theatre and arts venueis to be built on the former site of Granada’s TV studios in Manchester
  • £15bn for 84 roads projects in England by 2021 

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