George
Osborne presented the 2014 Autumn Statement from the House of Commons last
week. There were many new policies and changes announced as well as information
on growth and borrowing forecasts. We thought it’d be helpful to give you the
top points from the event below.
1) Stamp Duty
Previously, you would have paid
Stamp Duty Land Tax at a single rate on the entire property price. For example,
if you bought a house for £185,000, you would have had to pay 1% tax on the
full amount – a total of £1,850. Under the new rules you don’t start paying tax
until the property price goes over £125,000, and then you only pay tax on the
price of the property within the tax bands over that price.
This will make the system
fairer, and means stamp duty will be cut for 98% of people who pay it.
2) The Tax-Free Personal
Allowance
Since 2010, the government has
cut income tax for 26.7 million taxpayers.
The personal allowance – which
is defined as the amount you earn before you have to start paying income tax – is
to be increased again from £10,000 to £10,600 in 2015 to 2016.
3) Child Tax
George Osborne also announced
the children will no longer pay tax on economy flights. This will apply to all
under 12s on flights from 1st May 2015 and for under 16s as of 1st
March 2016.
This will save an average
family of four £26 on a flight to Europe and £142 on flights to the US.
4) ISA Inheritance
Currently, if someone passes
away they can’t pass on their ISA to their spouse, even if they have saved the
money together, meaning 150,000 people lose out on the tax advantages of their
partner’s ISA when their partner passes away.
From 3rd December
2014, if an ISA holder dies, they will be able to pass on their ISA benefits to
their spouse or civil partner via an additional ISA allowance which they will
be able to use from 6 April 2015. The surviving spouse or civil partner will be
allowed to invest as much into their own ISA as their spouse used to have, in
addition to their normal annual ISA limit.
5) Business Rates
To support small businesses in
local communities, the ‘high street discount’ for around 300,000 shops, pubs,
cafes and restaurants will go up from £1,000 to £1,500, from April 2015 to
March 2016. This is in addition to doubling Small Business Rate Relief for a
further year which means 380,000 of the smallest businesses will pay no rates
at all.
The government will also continue
to cap the annual increase in business rates at 2% from April 2015 to March
2016 – this will benefit all businesses paying business rates.
Finally, the government will
extend the transitional arrangements for smaller properties that would
otherwise face significant bill increases due to the ending of ‘transitional
rate relief’.
6) Apprentice NICs
To make it cheaper to employ
young people, from April 2016 employers will not have to pay National Insurance
contributions (NICs) for all but the highest earning apprentices aged under 25.
This is in addition to the
announcement made at Autumn Statement last year that employers won’t have to
pay NICs on under 21s from April 2015.
These are part of the
government’s wider ambition to have the highest employment rate in the G7.
7) Loans for postgraduate
masters
From 2016-17, income-contingent
loans will be available for postgraduate taught masters courses in any subject
for those under the age of 30.
The loans, of up to £10,000,
will beat commercial rates.
This will mean that more people
will be able to take advantage of postgraduate courses, including those from low-income
backgrounds.
8) ‘Google’ Tax
Currently some large
multinational companies divert profits abroad through complicated business
structures, such as the so-called ‘double Irish’, in order to avoid paying
taxes. The government is introducing a new tax to counter this
The ‘diverted profits tax’,
dubbed the ‘Google Tax’, will apply to a company’s profits that have been
diverted from the UK through complex arrangements such as these, and will apply
to both UK and foreign multinational companies. So if a company conducts a lot
of activity in the UK – sales, for example - but can avoid paying corporation
tax by moving profits generated in the UK to other countries through the
manipulation of the international tax rules, the UK will now be able to tax
those profits at a rate of 25%.
This will be introduced from
April 2015.
9) Corporation Tax Payments
Some banks made large losses
during the financial crisis, and subsequent misconduct and the costs associated
with mis-selling scandals. These losses are now being used by banks to
eliminate corporation tax payments on current profits.
From 1st April 2015,
the government will restrict the amount of banks’ profits that can be offset by
carried forward losses to 50%, increasing their contribution to public finances
through their tax payments.
10) Search and Rescue & Air
Ambulance Charities
From 1 April 2015, search and
rescue and air ambulance charities will be eligible for VAT refunds, in
recognition of the vital role they play in providing support to the emergency
services.
The government will also meet
the costs the hospice sector faces from VAT.
