The Autumn Statement: The Highlights

Whilst all clients of Lansdell & Rose would have by now received our email summary following the Autumn Statement, it is such a topical subject, (and will be for the coming months as we watch certain points unfold) it seemed sensible to further highlight some of the decisions that could affect you most.

So yes, the 2013 Autumn Statement could be considered more of an economic statement than its predecessors. Certainly in part this was because, for once, the Chancellor was able to say that his spring Budget forecasts had, in fact, been too pessimistic.

£1.5bn by the next election

Politics was also an important factor in the statement, with the next election now just 18 months (and two Budgets) away. Overall, the Chancellor’s actions will not alter the government’s tax take, although achieving that balance requires over £1.5bn to be raised in 2014/15 from the proposed new measures against avoidance, fraud, error and debt. Jolly subjects all round!

Related article: Tax avoidance: a mixed bag of thoughts

What’s new?

There were a few surprises among the array of consulted and well-trailed announcements. Landsell & Rose have put our spin on things and categorised them accordingly:

Plus-Favorable:

  • The personal allowance will increase to £10,000 in 2014/15.
  • The 2014 business rates increase will be capped at 2%
  • Small business rate relief will be extended for another year to April 2015.
  • From 6 April 2015 employers will no longer pay Class 1 national insurance contributions on earnings paid up to the upper earnings limit to any employee under the age of 21.
  • New ‘simplified’ IHT rules for trusts will be introduced from April 2015, following further consultation.
  • The investment limits for share incentive plans will rise to £3,600 for ‘free’ shares and £1,800 for ‘partnership’ shares from April 2014. The SAYE limit will double to £500 per month.
  • In October 2015 a new class of voluntary NICs (3A) will be introduced to allow pensioners who reach state pension age before 6 April 2016 to top up their Additional Pension entitlement.
  • A transferable tax allowance of £1,000 will be introduced for married couples and civil partners from April 2015.

 neautral-No big deal: (as in little change)

  • The higher rate (40%) tax threshold will increase by £415 to £41,865.
  • The overall annual individual savings account (ISA) subscription limit for 2014/15 will rise to £11,880, of which £5,940 can be invested in cash.

 Not great news:Negative-

  • From April 2015, capital gains tax will apply to future gains on residential property owned by non-resident individuals.
  • The final exemption period for private residence relief will be halved to 18 months from April 2014.
  • Legislation to block venture capital trust (VCT) enhanced buyback schemes will take effect from April 2014.

In addition, a host of specific employment anti-avoidance measures were announced, mostly aimed at arrangements designed to disguise employment. Obviously this is neither good nor bad news to the law-abiding taxpayer, but just adds to where the government are to be focusing their energies.

A closer look at some of the positive decisions:

Here’s a summary of some of the decisions that could affect you the most, looking at when the change will take place, what the change entails and how it will be implemented as well as the benefits from these decisions.

No employer NICs for under 21s

When: From 6 April 2015

What: Employers will no longer be required to pay Class 1 NICs for any employee under the age of 21 on their earnings up to the upper earnings limit.

How: National Insurance that an employer pays for an employee earning, say, £23k is around £2k.  For employees under 21, this charge is reduced to £NIL. Result!

Who: This is great news for dental practices and employers of younger people.

Why: A real financial incentive to employ the young!

 Business rates – cap

When: From 1 April 2014

What: A cap of 2% on the increase in business rates.

How: Simply any increases for 2014 will not exceed 2% of 2013

Who: All business owners

Why: Business rates have been the curse of dental practice and other business for decades, especially as they are payable irrespective of how well or badly a business is doing.  The Chancellor has been under a lot of pressure for some to do something about this.

Also: With effect from 1 April 2014, businesses will be allowed to pay their business rates over 12 months rather than ten months. Another small positive!

Small business rate relief

When: From 1 April 2014

What: The doubling of the small business rate relief (SBRR) will be extended for a further year.

How: The SBRR rules will be relaxed with effect from 1 April 2014. Businesses receiving SBRR and taking on an additional property will be allowed to retain SBRR on the first property for a year.

Who: All small businesses

Why: As above

For more information or for a copy of the Lansdell & Rose Autumn Statement summary, please contact us on 020 7376 9333.