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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.
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.
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.
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.
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.
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’.
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.
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.
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.
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.
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.