Earlier today the Chancellor delivered this year’s Autumn Statement in which he stated that “Britain is moving again. Let’s keep going”. To this end, a number of tax measures were announced that are intended to overhaul infrastructure, ensure that UK businesses are competitive and support young people in finding work. The headline points are explained below.
Abolition of NICs for under 21s
From 6 April 2015 employers will no longer be required to pay Class 1 secondary National Insurance Contributions on earnings paid up to the Upper Earnings Limit of £813 per week to any employee under the age of 21.
Changes to business rates
The Government will cap the increase in business rates to 2%. They will also extend the doubling of the Small Business Rate Relief (SBRR) to April 2015, and amend the criteria to allow businesses to retain the benefit of the SBRR for one year when they take on an additional property. To support the retail sector, the Government will introduce a discount of up to £1,000 against business rates bills for retail premises with a rateable value of up to £50,000. A temporary reoccupation relief will also be introduced for new occupants of empty retail premises. A 50% discount from business rates for 18 months will be granted to businesses moving into long-term empty retail properties between April 2014 and March 2016.
Fuel Duty freeze
The increase of 2p per litre due in September 2014 has been cancelled and there will be no further increase in the current Parliament.
Transferable allowances between married couples
From April 2015, a spouse or civil partner who is not liable to Income Tax or not liable above the basic rate for a tax year can transfer £1,000 of their personal allowance to their spouse or civil partner provided that the recipient is not liable to Income Tax above the basic rate. This could save couples up to £200.
Personal Tax Allowance and NICs
From 5 April 2014, the personal allowance for people under 65 will be increased to £10,000 and the basic rate band will be £31,865. There are no changes to the percentage rate of contribution for National Insurance Contributions (NICs) but there are changes to all of the thresholds and limits. The upper limits for NICs will continue to be aligned with the point at which higher rate tax becomes payable (i.e. £41,865).
CGT Principal Private Residence Relief (PPR) – Final Period Exemption
Currently, the PPR exemption is extended to include the final 3 years of ownership even if the owner no longer lives in the property at the time of sale. From 6 April 2014, this final period exemption will be reduced from 3 years to 18 months.
CGT Non-residents and UK residential property
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.
Partnerships with both corporate and individual members
There are two changes in this area.
- The first change will target partnerships where profits are allocated on a non-commercial basis to a corporate partner in circumstances where an individual member may benefit from those profits, (e.g. corporate partners where individuals are shareholders) and will take immediate effect.
- The second change will affect cases where partnership losses are allocated to an individual partner, instead of a corporate partner, to enable the individual to access certain loss reliefs and will take effect from April 2014.
Other anti-avoidance measures
- Further changes will be made to the controlled foreign company rules to prevent avoidance using group lending arrangements.
- The definition of a charity for tax purposes will be amended to exclude charities established for tax avoidance purposes.
- Where HMRC have defeated schemes in a tribunal or court hearing, other users of similar schemes will in future be requested to concede their position to reflect that decision or advise HMRC why they believe they should not. A tax-geared penalty will be charged if they fail to amend their return and it is subsequently found that the avoidance scheme they used fails on the same point of law. Affected taxpayers will also be required to pay the disputed tax in advance of their individual enquiry being closed.
- Rules will be introduced to prevent employment intermediaries being used to avoid employment taxes and obligations by disguising employment as self-employment.
