Chancellor George Osborne delivered his Autumn Statement at 12:30 yesterday to a mixed response. As always, there will be some winners and some losers from the measures announced. On some of them, the details will only emerge as consultation processes progress. In the following video, Stephen Anderson (Managing Partner) and Jane Parry (Tax Partner) deliver their key takeaway messages from the Chancellor’s speech.
Our full Autumn Statement summary is available to download here and the full list of key points is detailed below:
Measures affecting business
- The main rate of corporation tax falls to 20% on 1 April 2015 as planned.
- The Annual Investment Allowance for investment in plant and machinery remains at £500,000 until 31 December 2015.
- The R&D tax credit deduction for small and medium sized companies increases from 225% to 230% from April and the large company above the line deduction increases from 10% to11%.
- Less good R&D news is that the cost of materials incorporated into products that are sold will not be eligible for inclusion in R&D claims after 1 April 2015.
- The Patent Box, which provides a reduced rate of corporation tax on profits from qualifying patents, is to be phased out starting in 2016 and ending altogether in 2021. No new claimants will be allowed to join the scheme after June 2016.
- Entrepreneurs relief, which allows a 10% capital gains tax rate, will no longer be available on the sale of goodwill when incorporating a business.
- A new 25% “Google tax” is to be introduced to tax multinational businesses diverting profits from the UK.
- A package of investment in the Northern Powerhouse was announced including transport and connectivity improvements, research facilities and a new Sovereign Wealth Fund to reinvest fracking cash in the North.
- £500m extra funding for the Funds For Lending/Enterprise Finance Guarantee scheme to support bank lending to businesses and £400m to support venture capital investment in businesses.
- An increase in export funding of £45m to encourage development of export markets in Africa, Asia and South America.
- A reform of business rates – results to be announced in 2016.
- From April there will be no NIC cost of employing people aged under 21, or under 25 if they are apprentices.
Measures affecting individuals and trusts
- The personal tax allowance increases to £10,600 on 6 April.
- No changes to income tax rates.
- The 40% tax threshold increases to £42,385.
- There is to be a complete overhaul of the employment expenses and benefits rules and a removal of the distinction between employees earning above and below £8,500 from April 2016.
- Universal credits to be rolled out nationwide.
- The Annual Tax on Enveloped Dwellings (ATED) charge which taxes residential properties held in companies currently applies to properties worth £2m or more. That threshold drops to £1m in April 2015 and £500,000 in April 2016.
- The remittance basis charge applying to non-domiciled individuals living in the UK is to increase.
- Non-residents owning UK residential property are to be made subject to capital gains tax from April 2015.
- The major overhaul of trusts and introduction of the Settlement Nil Rate Band has been stopped. Instead measures targeted at tax avoidance using multiple trusts are to be introduced.
- New rules affecting 10 year charges for trusts and the treatment of accumulated income are to be introduced as planned.
- Stamp duty land tax on residential properties is substantially amended with immediate effect so that rates apply in bands, rather than the current rate thresholds which apply one rate to the whole property value.
Pensions and investments
- The major pension reforms announced earlier this year are to be introduced as planned in April 2015.
- The current death tax of 55% is to be abolished and pension pots will be able to be passed to family members tax efficiently.
- The 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 under such policies tax free.
- Pension savers will have much more flexibility in how and when to access their pension funds.
- ISA income tax beneficial status will be preserved when ISAs pass to a surviving spouse.
If you think you may be affected by any of the above, please give us a call on 01254 679131 and we will be more than happy to assist or email firstname.lastname@example.org.