Autumn Statement 2014
First Class Stamp
The Chancellor has just sat down from delivering the 2014 Autumn Statement speech. The two major surprises were the abolition of Entrepreneurs’ Relief (ER) for goodwill on incorporation and big changes to the Stamp Duty Land Tax on residential property.
The main tax and savings matters referred to in the speech were as follows:
• ER not available for disposals of goodwill to connected companies, e.g. on incorporation.
• Effective today.
Stamp Duty Land Tax:
• Stamp Duty Land Tax to be changed for residential homes.
• Basis of charge changed from flat rate to graduated – first £125k tax free, 2% up to £250k, 5% to £925k, 10% up to £1.5m, 12% over £1.5m.
• Effective midnight tonight.
• Employers NI abolished for those under 21.
• Wages for apprentices under 25 to be employer NIC free.
• Employment allowance to be extended to carers.
• 25% diverted profit tax on corporate profits artificially shifted abroad for multinational companies with economic activity in the UK.
• Tax losses generated by banks during financial crisis to be limited to 50%, bad debt relief to be delayed.
• Research & Development – tax credit for SME’s extended to 230% (from 225%) and underlying credit for large businesses extended to 11%
• VAT to be refunded for search and rescue organisations and hospice charities.
• Small business rate relief doubled for another year.
• Corporation tax powers devolved to N. Ireland. Wales to receive power to set business rates. Income tax rates and other powers devolved to Scotland.
• Funding for lending scheme extended for a year for small firms.
Savings, Income tax and Individuals:
• 55% death tax abolished for annuity pensions if passed on death to loved ones from April 2015.
• Income tax free ISA status to be passed to spouse on death.
• ISA limit extended to £15,240 from April 2015.
• Personal Allowance to rise to £10,600 (instead of £10,500 as previously announced) from April 2015.
• Personal Allowance passed on in full to higher rate payers – 1st increase for 5 years.
• Higher rate threshold increases to £42,385 from April 2015.
• IHT exemption extended to aid workers and military personnel who pass away on duty.
• Non-dom annual charge to remain at £30k for those resident in the UK for 7 years out of the last 9.
• Non-dom’s resident in the UK for 12 years out of 14 – annual charge increased to £60k.
• Further band for those resident for 17 years of last 20 years and a £90k annual charge.
• Fuel duty frozen again.
• Airlines required to list fuel duty charges separately.
• Air passenger duty for under 12’s abolished from next May. Abolished for under 16’s from 2016.
• Changes to the ATED charge announced.
• Social investment tax relief extended.
• Theatre tax break extended for touring orchestras.
• Post graduate students to receive loans for courses up to £10k.
• Sovereign wealth fund announced for North of England for Shale Gas receipts.
This is very much an overview of the speech and more details will be available in the press releases on which we will report in due course. If you do require any further information at this stage please contact our Tax Director Jenny Marks.