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.

Michael Cope is a Tax Partner at chartered accountants Duncan & Toplis in Lincoln.

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.

Michael Cope is a Tax Partner at chartered accountants Duncan & Toplis in Lincoln.

The Chancellor George Osborne on Wednesday made his Autumn Statement in the House of Commons. Michael Cope, Tax Partner at chartered accountants Duncan & Toplis, takes a look at the announcement and the impact it is expected to have on businesses.


Headline rates

The Chancellor announced an increase in the thresholds from which basic and higher rates of tax are paid. These increases give more tax relief for all taxpayers, and unlike some prior years this will include higher rate taxpayers as well.

Increases have also been announced for the Capital Gains Tax annual exemption and nil-rate band for Inheritance Tax, meaning capital taxes are to be marginally less onerous than before. These are only incremental changes, however, and tax planning advice should still be sought if these are expected to be an issue; these changes alone are unlikely to remove many taxpayers from the burdens of these taxes.

Capital allowances

The good news for business is that the Annual Investment Allowance (AIA) has been increased from £25,000 to £250,000 for two years from 1stJanuary 2013. This means that businesses will now be able to invest up to £250,000 per annum in qualifying plant and machinery and receive an immediate tax deduction. This is expected to encourage many businesses to make capital investment in their business. Previous changes in the AIA have resulted in tricky transitional rules that can catch some taxpayers out, so businesses should speak to us to avoid falling foul of any such rules in the year of introduction.

Corporation tax

The main rate of Corporation Tax has been set to reduce to 22% from April 2014. The Chancellor announced that this is to reduce further to 21% from April 2014. There will henceforth be only a 1% difference in the rate of corporation tax payable by small companies and those paying at the main rate. We can see there being only one Corporation Tax rate of 20% in the future but as yet no announcements have been made on this.

Fuel duty

An increase in the fuel duty was forecast from January 2013 of 3p per litre and the Chancellor has announced that 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.

Business rates

The Small Business Rates Relief has been extended. This relief was previously due to be withdrawn from April 2013 but has been extended by an additional year. In addition, newly built commercial property completed between October 2013 and September 2016 will be exempted from empty property rates for the first 18 months. This is good news for small businesses and for those developing new commercial property to reduce their overheads.

Tax avoidance and evasion

The Chancellor reinforced the Government’s stance on preventing both tax evasion and tax avoidance by allocating more tax inspectors and more funding to HM Revenue & Customs.

For the first time in the UK a General Anti-Avoidance Rule (GAAR) is expected to be announced in 2013.

In addition, the Chancellor has announced specific areas that have been open to abuse for which loopholes have been closed.

Although these rules are intended to attack tax avoidance schemes, innocent cases may well be caught unintentionally by these provisions. It will be worth seeking advice if any of the announcements may impact your business.

Summary

Rises in tax thresholds and exemptions and a reduction in main rate Corporation Tax should help many businesses reduce their tax burden. The significant increase in the Annual Investment Allowance gives an opportunity to receive immediate tax relief for those investing in their business.

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

Michael Cope is a Tax Partner at chartered accountants Duncan & Toplis in Lincoln.