Autumn Statement 2014: Key Facts

Today was the last Autumn Statement before the General Election.

There were a number of very important tax announcements and they are as follows:

Income Tax

Personal Allowance

Very broadly the personal allowance is the amount of income an individual can earn without paying UK income tax.

This allowance will increase from April 2015 by a further £100 than the previously announced £10,500 to £10,600. Unlike previous years, this is also being passed on to higher rate tax payers, although not those with taxable income in excess of £100,000.

Taxation of non-UK domiciled individuals

Currently individuals that are non-UK domiciled and have been resident in the UK for 12 out of the last 14 years have to pay a £50,000 charge if they want to continue to be taxed on the remittance basis. This charge will increase to £60,000.

A new charge of £90,000 will be introduced for non-domiciled individuals that have been UK resident for 17 out of the last 20 years.

Corporation Tax

 Research & Development (SME scheme)

 SMEs that carry out qualifying research and development work can for tax purposes take an additional 125% deduction for certain qualifying expenditure. This percentage will increase to 130% from 1 April 2015.

There will also be an advance assurance scheme introduced for small businesses making their first research and development claim.

Research & Development (large company scheme)

The above the line credit will increase by 1% to 11%.

Multinational enterprises

A new ‘diverted profit tax’ will be introduced aimed at multinationals that divert profits away from the UK using aggressive tax planning.  The Diverted Profits Tax will be applied using a rate of 25% from 1 April 2015.

Stamp Duty Land Tax (SDLT)

Stamp Duty Land Tax is a tax payable on purchase of UK property. One problem with SDLT is the ‘cliff edge’ or ‘slab’ nature.

This new measure changes the rules for calculating the SDLT charged on purchases of residential properties. At present SDLT is charged at a single percentage of the price paid for the property, depending on the rate band within which the purchase price falls. From 4 December 2014, SDLT will be charged at each rate on the portion of the purchase price which falls within each rate band.

The new rates and thresholds are:

Property value bandRate
£0-£125,0000%
£125,001 – £250,0002%
£250,001 – £925,0005%
£925,001 – £1,500,00010%
£1,500,001 and over12%

National Insurance Changes (NIC)

 Currently most employers can reduce the employers Class I National Insurance bill by up to £2,000 a year. This is known as the Employment Allowance and this is being extended to care and support workers from April 2015.

From April 2016 employer NIC up to the upper earnings (UEL) limit for apprentices under the age of 25 will be abolished.

Air Passenger Duty (APD)

APD is a form of excise duty which is charged on the carriage of passengers flying from the UK.

There is a reduced rate for those that travel in the lowest class of travel. From 1 May 2015 children under 12 will be exempt from the reduced rate of APD. Children under 16 will be exempt from 1 March 2016.

New Tax Reliefs

 New corporation tax reliefs will be introduced for children’s television programmes and orchestras.

Anti-Avoidance

Capital Gains Tax – Incorporation

There are a number of measures outlined that will affect incorporation on and after 3 December 2014.

The first measure is to prevent proprietors of businesses who sell their business to a close company to which they are related in order to extract funds from the business at a special, low, rate of CGT (usually 10% due to a relief called entrepreneur’s relief) rather than the normal rates of income tax and national insurance contributions.

Corporation Tax – Incorporation

This is the second measure and is designed to restrict corporation tax relief on the acquisition of the reputation and customer relationships associated with a business (the ‘goodwill’) when these intangible assets are acquired by a company that is related to the individuals that carried on the business prior to the transfer (incorporation). It removes an unintended tax benefit where, on incorporation, the individual sole trader or partnership business is transferred to a related company.

Annual Tax on Enveloped Dwellings (ATED)

High value residential dwellings owned by non-natural persons (usually companies) have to pay an annual charge unless one of the numerous exemptions applies. This is known as the ‘ATED charge’.

The annual charges on the ATED will increase by 50% above inflation for residential properties worth than £2 million for the chargeable period 1 April 2015 to 31 March 2016.

If you have any further questions, please do not hesitate to contact your Barnes Roffe contact.

Download Autumn Statement Summary

Download Notes

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