The Chancellor held his 2014 Autumn Statement on Wednesday 3rd December. There were a number of measures announced, many of which may affect you.
The most headline-catching announcement was the change made from 4th December to Stamp Duty on residential property sales. Previously, the rate at which stamp duty was levied on a sale depended upon the sales price, and that rate was applied to the whole of the sales value. For instance, a property sold for £125,000 would not pay any stamp duty. However, if the property was sold for £125,100 then stamp duty of £1,255 would be payable.
This system has been the subject of criticism for many years, and lead to manipulation of sales values in marginal cases. Finally, the government has listened and changed the method of calculation to a banded system which is much fairer (no doubt the fact that this has occurred only a few months before an election is PURE coincidence!). Stamp duty is now payable as follows:
- On the first £125,000 of proceeds Nil
- On proceeds between £125,001 and £250,000 2%
- On proceeds between £250,001 and £925,000 5%
- On proceeds between £925,001 and £1.5m 10%
- On proceeds above £1.5m 12%
Therefore, in the example of a property sold for £125,100 the stamp duty payable has fallen to £5, a reduction of £1,250.
There are, however, some other important announcements as follows:
Personal Allowances
From 5th April 2015 the personal allowance is increased to £10,600 and the higher rate threshold becomes £42,385. This increase in the personal allowance means that it exceeds the age allowance for people born after 5th April 1938, and the abatement of the age allowance will only, therefore, apply to people born before 6th April 1938 and will be limited to a maximum of £60. Given the ever-reducing value of this allowance then this will be a very welcome simplification, and means that a number of pensioners will no longer need to complete a self assessment tax return. There was a proposal made several years ago that personal allowances should not be made available to non-residents, and the government held a number of consultations on this. It has now been announced that this restriction will not take effect until at least April 2017.
Individual Savings Accounts (ISAs)
The annual limit will increase to £15,240 from 5th April 2015. Also, it has been announced that legislation will be introduced to allow the allowance to pass to a surviving spouse upon the first death.
Employment Allowances and Employer National Insurance
The current Employment Allowance of £2,000 is to be extended to care and support workers. Also, Employer National Insurance Contributions are to be effectively scrapped for apprentices under the age of 25.
Fuel Duty
This has been frozen for another year.
Incorporation
A couple of changes affecting the incorporation of a business have been announced with immediate effect. 1. Restrictions are introduced to Corporation Tax Relief claimable on the acquisition of goodwill when it is acquired from a related individual or partnership. 2. Restrictions are introduced to Entrepreneurs Relief on the disposal of goodwill to a related close company.
Air Passenger Duty (APD)
APD is abolished for children under 12 travelling on economy flights with effect from May 2015, although it is not clear whether this will be before or after the half-term holiday on 22nd May.
Business Rates
The Small Business Rate Relief has been extended for another year. Also a £1,500 small business rate discount has been introduced for high street shops, pubs and cafes.
Other Announcements and Consultations
Increases and simplifications to R & D tax credits for companies. Increases to the Remittance Basis Charge for non-domiciled individuals. Diverted Profits Tax of 25% on profits artificially diverted overseas (the “Google” tax). Increased penalties for serial tax evaders, and those hiding assets overseas. Removal of tax relief for reimbursed expenses when part of a salary sacrifice scheme.