Michael Cope

The Chancellor George Osborne today gave his Autumn Statement to Parliament. It was a ‘steady as she goes’ statement to support the recovery from what the Chancellor in his speech finally described as “the great recession”, acknowledging that GDP (gross domestic product) declined by 7.2% from the 2008/09 level.

Pensions

State pension age will be subject to periodic increases in order to keep pace with increasing life expectancy, anticipated to be 68 in the mid 2030s and 69 in the late 2040s. The rate of basic state pension receivable is set to rise again by £2.95 from next April.

Transferable personal allowance

From April 2015, spouses and civil partners can transfer up to £1,000 of their income tax personal allowance to their spouse or civil partner provided neither partner is a higher or additional rate taxpayer. Measures will be put in place to increase the transferable amount in line with future increases in the personal allowance.

Capital gains tax

UK capital gains tax will be introduced on the disposal of UK residential property held by non UK resident individuals. This will be effective from April 2015.

The current capital gains tax main residence exemption provides for the final 36 months of ownership of a qualifying property to be exempted from tax, even when it is empty or a replacement main residence is owned. From April 2014 this will be restricted to 18 months.

ISAs

The limits for ISA subscriptions are to be increased. From April 6, 2014, the individual limit will be £11,880, half of which can be saved in a cash ISA. From the same date, junior ISA and Child Trust Fund limits will both increase to £3,840.

Vehicle Excise Duty

The tax disc to evidence payment of VED was introduced in 1921, but with the DVLA and police now relying on an electronic register, it is no longer needed. At present, motorists are able to choose whether they pay VED for a twelve or six month period. There will now be an option to pay the charge by direct debit, annually, bi-annually or monthly, the latter two methods attracting a 5% premium. The changes come into effect from October 1, 2014.

Fuel duty

The proposed fuel duty rise to take place from September 2014 has been cancelled.

Businesses

Effective from April 2015, employer’s National Insurance contributions are to be scrapped for employees aged under 21.

The chancellor will cap business rate increases in England and Wales at 2% for one year from April 2014, in order to boost businesses and the High Street. Business rate relief for the smallest businesses will be extended until April 2015. From April 1, 2014, business rates will be payable over 12 months as opposed to the current 10 months.

A discount of £1,000 on business rates is to be given for retail and food and drink premises, with a rateable value below £50,000 for the two years between April 1, 2014, and March 31, 2016. During the same two years, there will also be a 50% discount offered on business rates for a period of 18 months where businesses move into retail premises that have been empty for a year or more.

Tax avoidance and evasion

The attack on tax avoidance continues. Amongst the latest targets are employees masquerading as self-employed together with other methods of disguising employment, the treatment of corporate partners and the abuse of charitable status.

Careful tax planning is always recommended for businesses to ensure they do not fall foul of the small print of the changes in legislation.

The Chancellor George Osborne announced a ‘fiscally neutral’ budget on Wednesday, notable for containing a few targeted tax reductions, largely financed by savings in Government spending. Here are the main points from the new budget and how they will affect individuals and businesses in Lincolnshire.

Help for individuals

There will be an increase in the personal allowance (the threshold above which individuals will start to pay tax) to £10,000 from 6th April 2014. This increase gives more tax relief for all taxpayers, and unlike in some prior years, this will include higher rate taxpayers as well.

The Chancellor opened his statement by announcing this was a budget “for those who aspire to work hard and get on”. A number of the announcements were centred around this comment, including a doubling to £10,000 of the amount employers can loan to their employees without an income tax charge arising on the employee and a National Insurance charge on the employer.

Assistance for small businesses

The Chancellor also announced a new Employment Allowance reducing the burden of Employer’s National Insurance by up to £2,000 per year. This is available to all businesses.

Tax cuts for large companies

The Chancellor had previously announced that the main rate of Corporation Tax was to reduce to 21% from 1 April 2014. The Chancellor announced that this is to be reduced further to 20% from 1 April 2015.

Once this is in force there will be only one flat rate of Corporation Tax of 20%, simplifying Corporation Tax calculations.

The feel-good factor

An increase in fuel duty was forecast for September 2013 of 1.89p per litre and this increase is to be abolished. This will benefit both individuals and businesses that rely on the mobility of their workforce or deliver goods by road.

The Chancellor announced that the proposed duty increase on alcohol is to remain in place, except for beer which will instead benefit from a 1p per pint reduction. It was reported that 10,000 pubs have closed in the past decade, so there is at least some silver lining for those in the hospitality industry.

Announcements were made that the Government will now fund interest-free loans on up to 20% of the value of newly built property where the purchaser provides a 5% deposit. This will be great news for those looking to get on the property ladder, but it will also be gratefully received by property developers, hopefully boosting the housing market.

Protecting revenue

The Chancellor further reinforced the Government’s stance on preventing both tax evasion and tax avoidance, following his announcements in the Autumn statement, calling this “one of the largest ever packages of tax avoidance and evasion measures”.

As well as a number of targeted anti-avoidance measures intended to close specific loopholes in tax law, for the first time in the UK a General Anti-Avoidance Rule (“GAAR”) is to come into effect. This is intended to prevent artificial tax avoidance schemes achieving an unfair tax advantage. This has been in the pipeline for some time now, but it will now come into effect from April.

In addition, the Chancellor has announced a “naming and shaming” system for those promoting tax avoidance schemes.

Also read: The winners and losers of George Osborne’s budget in The Guardian and try the Budget Calculator from BBC News.