AUTUMN STATEMENT – 5 DECEMBER 2013
George Osborne presented his Autumn Statement to Parliament amid mixed messages spilling from the Treasury, and promoted in the national press, about what he would, and would not give away.
The reported economic indicators were encouraging:
A number of incentives for small businesses and changes to personal and business taxation were also confirmed. In more detail they are:
Personal taxes and related matters
Personal Tax and National Insurance 2014-15
Tax Credit, Child Benefit and Guardian’s Allowance 2014-15
NEW – Married Person’s Allowance
From April 2015 a spouse or civil partner, who is not a tax payer, or who does not pay tax above the basic rate, will be entitled to transfer up to £1,000 of their personal allowance to their spouse or civil partner. This will not advantage higher rate tax payers as the recipient of the transfer cannot be subject to tax at higher than the basic rate.
In effect, the transferor’s personal allowance will be reduced by £1,000, and the recipient’s tax will be reduced by up to £200 (if the basic rate of tax stays at 20%).
In his speech George Osborne indicated that this was “a beginning”. Perhaps the amount of the transfer will be increased in future years?
NEW – National Insurance Contributions (NIC) opportunity
From October 2015 a Class 3A NIC will be introduced to give those who reach state pension age, before 6 April 2016, an opportunity to boost their Additional State Pension.
Capital Gains Tax (CGT) – Private Residence Relief change
At present, if a property has been occupied at any time as an individual’s private residence, the last three years of ownership are disregarded for CGT purposes – even if the individual is not living in the property when it is sold, and may possibly be claiming private residence relief on a different property at the same time.
From 6 April 2014 this final period exemption will be reduced to 18 months.
TIP: Those property owners considering the sale of a property that has been a private residence at some time should take this change into account – if they can sell before 6 April 2014 they will still exempt the last three years of ownership from CGT.
The Government have also announced plans to introduce CGT on future gains by non-residents who sell UK residential property from April 2015.
CGT Annual exemption
NEW – Social Investment tax relief
This is a new relief for investment in social enterprise and will commence April 2014.
Investment in Social Impact Bonds will also be eligible for this new relief.
Other investment incentives 2014-15
Fuel Duty and tax discs
The planned September 2014 increase in fuel duty has been cancelled. No further increases will be made during the current Parliament.
A further administrative inconvenience for motorists is to be abolished: the paper tax disc. It will be replaced by an electronic system.
State Pension changes
The State Pension Age (SPa) will increase to 66 years in 2020. The Government has already indicated the SPa will rise to 67 years by 2028.
It is further proposed that the SPa will rise again: to 68 years in the mid 2030s, and to 69 years by the late 2040s.
The Government estimates that it could save around £500bn from pension expenditure over the next 50 years due to these changes in SPa.
The basic State Pension will rise by £2.95 a week from April 2014.
The Government has committed to delivering an average saving of £50 in household expenditure by reducing the impact of government policy on energy bills. It will do this whilst maintaining support for poorest families and providing new home owners with an incentive worth up to £1,000 to undertake energy efficiency measures.
Average increases in fares will be capped in 2014 in line with RPI, not at 1% above RPI as previously announced.
Film Tax Relief
These measures are subject to State Aid approval.
NEW – Theatre Relief
A consultation will be launched in spring 2014:
These measures are expected to come into force from April 2015.
Tax avoidance and evasion – effective as from 5 December 2013
The following five measures have been introduced:
Charities established for tax avoidance purposes
The Finance Bill 2014 will contain provisions to prevent charitable tax reliefs to charities where one of the main purposes of establishing the charity was tax avoidance.
Accelerated tax payment in avoidance cases
There is evidence that tax-payers are entering into avoidance schemes in order to defer tax liabilities. To counter this activity provisions will be included in the Finance Bill 2014 to require payment of disputed tax when a formal avoidance follower penalty notice is issued at the beginning of an enquiry.
NEW – Abolition of employers’ NICs for under 21s
From 6 April 2015 employers will not have to pay Class 1 secondary NICs on earnings paid to the under 21s up to the Upper Earnings Limit (UEL) – below £813 per week.
Investment in young people
Free school meals
Pupils attending state schools in England, in Reception, Year 1 and Year 2 are to get free school lunches from September 2014 at an estimated cost of £600m per year.
Capital funding will be made available to improve capacity in school kitchens. Additional funding will also be made available to enable Further Education and Sixth Form Colleges to offer free meals to disadvantaged students.