Full summary of Autumn Statement

Burton Sweet logoHere is a full summary of the Autumn Statement courtesy of Burton Sweet accountants.

Economic forecast

The OBR has revised its forecast for GDP growth up from 0.6% to 1.4% in 2013 and from 1.8% to 2.4% in 2014.

GDP growth is then forecast at 2.2% in 2015, 2.6% in 2016 and 2.7% in 2017 and 2018.

The OBR has revised up its forecast for employment across the forecast period and expects employment to reach 31.2 million by 2018.

The OBR expects the rate of inflation to slow between 2013 and 2016, returning to the 2.0% target in the second half of 2016.

Borrowing forecasts £111bn in 2013-2014, £96bn in 2014-2015, £79bn in 2015-2016, £51bn in 2016-2017

Personal Taxes

Allowances – People born after 5 April 1948 will be entitled to a basic personal allowance of £10,000 for 2014/15.

The ‘higher rate threshold’ (the sum of the basic personal allowance and the basic rate limit) will be £41,865.

From April 2015, a spouse or civil partner will be entitled to transfer £1,000 of their personal allowance to their spouse or civil partner. This will only available where neither spouse/civil partner are liable to Income Tax at the Higher Rate.

Tax Credit, Child Benefit and Guardian’s Allowance – rates for 2014 to 2015  Tax Credits – disability elements increased by 2.7%. Other rates are increased by 1%. The family element of child tax credit is not increased annually and remains at £545.

Child Benefit – increased by 1% Guardian’s Allowance – increased in line with CPI of 2.7%.

National Insurance

From 6 April 2015 employers will no longer be required to pay Class 1 secondary National Insurance Contributions (NICs) on earnings paid up to the Upper Earnings Limit (UEL) to any employee under the age of 21.

Benefits and State Pension

A new benefits cap is to be introduced although Job seekers and State pension will not be included.

18-21 year olds signing on for benefits without basic English and maths skills will be given compulsory further training from day one or lose their entitlement.

£2.95pw increase in State Pension from April 2014.

From October 2015 a new class of voluntary National Insurance Contributions (Class 3A) will be introduced that gives those who reach state Pension age before 6 April 2016 an opportunity to boost their Additional State Pension Increase in State Pension Age is announced- from the mid 2030s the age will be 68, increasing to 69 in 2040s.

This is anticipated to save £500bn

Capital Gains Tax (CGT)

Private Residence Relief – Final period rule – The final period exemption applies to a property that has been a person’s private residence at some time during the period of ownership.

From 6 April 2014 the final period exemption will be reduced from 36 months to 18 months.

Non-Resident Property Owners – From April 2015 a capital gains tax charge will be introduced on future gains made by non-residents disposing of UK residential property.

A consultation on how best to introduce this will be published in early 2014 Annual Exempt Amount – For 2014/15 the annual exempt amount will be £11,000 and £11,100 for 2015/16 and subsequent years.

The exemption for most trustees will be £5,000 and £5,500 respectively.

Social Investment Tax Relief A new tax relief for investment in social enterprise will commence in April 2014.

Following consultation investment in Social Impact Bonds will also be eligible.

Share Schemes

For Share Incentive Plans (SIPs) the individual limits on the ‘free’ shares companies can award to employees for 2014/15 will be increased from £3,000 to £3,600 per year.

For Save as You Earn (SAYE) the amount that employees can save and apply towards the purchase of share for 2014/15 will be increased from £250 to £500 per month.

ISA’s

The overall annual Individual Savings Account (ISA) subscription limit for 2014/15 will be £11,880, of which £5,940 can be invested in cash the annual subscription limit for Junior ISA and Child Trust Fund (CTF) for 2014/15 will increase from £3,720 to £3,840.

Business Taxes

Bank levy change in rate The Bank Levy full rate will be set at 0.156% from 1 January 2014.

Film Tax Relief Subject to State aid approval, from April 2014 the rate of film tax credit for surrenderable losses will be 25% on the first £20 million of qualifying core expenditure and 20% thereafter.

The minimum UK expenditure qualification will also change from 25% to 10%.

Theatre Relief A consultation will be launched in spring 2014 on the introduction of a limited corporation tax relief for commercial theatre productions and a targeted relief for theatres investing in new writings or touring productions to regional theatres.

Business Issues

Apprenticeships

The Chancellor confirmed that HMRC will directly fund employers for 20,000 apprenticeships over the next 2 years.

Business Rates

Business rates in England and Wales to be capped at 2% rather than linked to RPI inflation.

Business owners will be allowed to pay their business rates in 12 monthly instalments.

To help improve shop vacancy rates in town centres, a new Reoccupation Relief was announced. Properties with a rateable value of up to £50,000 will receive a discount on their business rates worth £1,000.

Businesses moving into vacant properties will have their rates cut by 50%.

Other Announcements

Fuel Duty Main Rate Freeze The increase due in September 2014 has been cancelled and there will be no further increase in the current Parliament.

Rail Fares The average increase in regulated rail fares for 2014 will be capped in line with the Retail Prices Index.

School Meals Free school meals will be introduced for all infant school children in reception, year 1 and year 2.

enewsletter