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Autumn Statement 2014: Expert analysis

by Scott Brown | Dec 03, 2014
  • Chancellor George Osborne gave his much-anticipated Autumn Statement earlier. Our Accounting team have unpacked the contents of Osborne’s red briefcase to explain how the speech affects you over the course of the next year.
    autumn-statement-2014-expert-analysis

    State of the economy

    • UK fastest growing economy in the G7
    • 3% growth forecast in 2014 up from 2.7% predicted in March
    • 2.4% 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 are 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 property stamp duty so that rates fall only to that part of the property price that falls within each band
    • 0% in 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. Stamp duty on houses costing more than £937,000 to be more expensive from tomorrow.

    Personal and business taxation

    • Personal Tax Allowance to increase to £10,600 next April
    • Higher rate 40% tax threshold rises from £41,865 to £42,385 next year
    • Individual Savings Account (ISA) threshold increases from £15,000 to £15,240 next April
    • ISAs to retain their tax-free status when passed on when a spouse dies
    • HMRC to scrap the tax on people who pass annuities onto their children
    • From April 2015, beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed term annuity will be able to receive any future payments from such policies tax-free. The tax rules will also be changed to allow joint life annuities to be passed on to any beneficiary. These changes mean that people will no longer have to worry about their pension savings being taxed at 55% on death.
    • New £90,000 charge for non-domiciled persons resident in the UK for 17 of the past 20 years. Charge of 12 of last 14 years increased from £50,000 to £60,000.
    • Capital Gains Tax: The government will prevent individuals from claiming ER on disposals of the reputation and customer relationships associated with a business (“goodwill”) when they transfer the business to a related close company. This will affect transfers on or after 3 December 2014.
    • Air Passenger Duty to be scrapped for under-12s from 1 May next year and for under-16s the following year
    • Introduction of 25% tax on profits generated by multinationals that are shifted out of the UK, set to raise £1 billion over five years #googletax
    • Bank profits which can be offset by losses for tax purposes to be limited to 50%
    • National Insurance to be abolished for young persons working apprenticeships
    • Fuel duty still frozen
    • Continuation of investigation into look at tax evasion, avoidance and aggressive tax planning to bring in at least an extra £5 billion
    • Disclosure of Tax Avoidance Schemes (DOTAS) transparency - HMRC will publish summary information about tax avoidance promoters and schemes that are notified under the regime to increase transparency in this area and further educate potential scheme users of the risks involved in entering into marketed tax avoidance.
    • Small business rate relief to be doubled for another year to £1,500
    • The government will introduce legislation, effective from 6 April 2015, to ensure that sums which arise to investment fund managers for their services are charged to Income Tax.

    Properties enveloped in companies

    • The government introduced measures in Budgets 2012 and 2013 to tackle this tax avoidance and ensure that a fair share of tax is paid, including a higher charge of Stamp Duty Land Tax (SDLT), the Annual Tax on Enveloped Dwellings (ATED) and the related Capital Gains Tax charge.
    • From 1 April 2015, the charge on residential properties owned through a company and worth more than £2 million but less than £5 million will be £23,350; for properties worth more than £5 million but less than £10 million the charge will be £54,450; for properties worth more than £10 million but less than £20 million the charge will be £109,050; and for properties worth more than £20 million the charge will be £218,200.

    Research and development (R&D)

    • From 1 April 2015, the “above-the-line” credit will be increased from 10% to 11% and the SME scheme rate will increase from 225% to 230%.

    Health and education

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

    Not sure what the 2014 Autumn Statement means for you or your business? Our accounting team takes a personal approach to your needs, and can help you unpack the benefits and risks that this year’s statement poses. For more information, please give us a call on + 44 (0) 20 7759 7553 or email accounting@sableinternational.com.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

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