Following the Autumn Statement yesterday, our Tax Manager, Hollie Ord has provided a brief round up so you can find out some of the key things that you may find interesting.
The Chancellor was keen to provide a much needed boost for Britain’s small businesses and there were some positive measures in yesterdays speech which will go a long way to helping reduce costs and improving business confidence. Whether this will be enough as we enter a period of uncertainty at the start of next year remains to be seen. However a number of interesting announcements were made in George Osborne’s last Autumn Statement of this parliament so here’s our list of key points:
- The Chancellor promised to put the Northern Powerhouse at the core of the Autumn Statement. His proposal to generate a new sovereign wealth fund, the £250m investment in a new advanced materials institute with branches across the North and the promise of more devolution should have caught the attention of local businesses. Furthermore the £640 million investment in the A1 road north and west of Newcastle, as well as a £170 million investment towards the improvement of trans-Pennine road is a great prospect for the economy.
- While the announced on road investment is welcome, in our counties there is still significant needs for more high speed broadband and greater 4G mobile coverage. This will make it easier for our businesses to grow and bring in new ways of working/connecting with the worlds markets.
- A new 25% tax charge is being introduced for companies who artificially divert profits out of the country – this is set to impact on the likes of Google/Starbucks (and it will be interesting to see how this interacts with transfer pricing).
- This Autumn Statement announces support for Peer to Peer (P2P) and crowdfunding platforms through a package of measures to remove barriers to their growth from regulation and tax rules (great news for our friends at www.growthfunder.co.uk). These include a new bad debt relief for lending through P2P platforms; a consultation on whether to extend ISA eligibility to lenders using crowdfunded, debt-based securities and an intention to review financial regulation which currently stands in the way of institutional lending through P2P platforms. This change in the tax system will make lending to small businesses via crowd funding marketplaces much fairer for individual investors, putting them in an equal position to larger lenders such as banks.
- It’s great to see the Chancellor delivering a boost to Britain’s entrepreneurs and SMEs with Research and Development tax credits increasing to 230%, and to 11% for large companies from 1 April 2015. For more information on whether you are eligible please visit our blog at http://blog.harlandsaccountants.co.uk/want-know-rd-tax
- Changes to pensions to allow individuals to pass on their unused defined contribution pension savings to any nominated beneficiary when they die, instead of paying the 55% charge which currently applies. The tax rules will also be changed to allow joint life annuities to be passed on to any beneficiary. The removal of the 55 per cent tax on pension funds post-75 will undoubtedly encourage people to focus on pension planning. We are living longer, and the ability to use pension funds in conjunction with tax planning is a positive move by the government. Merged with the implementation of workplace pension schemes, this will continue to highlight the importance of investments, long-term goals and planning for the future.
- ISAs to be transferable to partners on death such that they retain their tax free ISA status. The Chancellor has also raised the investment cap on ISAs to £15,240 from April 2015. Personal savings strategy is clearly high on the government's schedule.
- National Insurance up to the upper earnings limit for young apprentices (aged under 25) will be abolished.
- The personal allowance will increase to £10,600 in 2015/16, and the basic rate band will also increase to £31,785.
- A complete overhaul is taking place for Stamp Duty with effect from midnight on 4 December 2014, the previous slab system is being abolished (where it is charged at a single rate on the whole transaction value); instead, SDLT will apply only to the part of the property that falls within each band, as follows:
- No tax on the first £125,000
- 2% up to £250,000
- 5% up to £925,000
- 10% up to £1.5 million
- 12% on everything above that.
Overall, I feel that the Chancellor has announced an Autumn Statement for small businesses. Important measures, such as the development of High Street Rates , the ongoing reduction of rates for small business and the review of Business Rates, are good news and should help build better businesses and create employment. Such measures, alongside such consumer-related messages including the reform of the Stamp Duty system mean this is an optimistic statement for SMEs.
If you have any questions about any of the changes and how they will impact you, please contact a member of the team.