Victoria Bishop, robinson+co’s Tax Partner, highlights the important tax measures from the Chancellor’s speech on 5 December 2013.
The important things first: writing as the 100mph wind abates, the immediate point to note is that the Statement seems to be misnamed – the “Winter Statement” anyone?
Marriage – a £200 bonus? Is it worth it?
Ever since the Coalition came to power in June 2010 it has been expected that marriage will – somehow – be rewarded within the tax system. Mr Osborne has finally announced that this will happen from April 2015.
Unfortunately the rules do not seem to be straightforward and will be worth £200 only. Looking at the rules immediately after the speech it seems that only households where one spouse has income less than the Personal Allowance - £10,000 – will benefit from this measure:
• Both spouses (or civil partners) must be basic rate taxpayers
• One spouse can transfer £1,000 of personal allowance (worth £200 of tax) to the other spouse
Mr Osborne is clearly attempting to forestall any claims of bias to richer households, although as the basic rate for 2014/15 will be £31,865 (down from £37,400 in 2010/11) this may be a moot point. (Although remember that for 2014/15 the personal allowance is £10,000, meaning that you have to have income of £41,865 before higher rate tax is charged.)
robinson+co will of course be reviewing its clients’ household tax liabilities to ensure that this relief is claimed wherever possible. In the meantime talk to your normal contact at robinson+co if you have any queries.
Capital Gains Tax – tightening up the reliefs
A quirk of the capital gains tax (“CGT”) system has been that sales of UK situated assets were exempt from CGT if the seller was non resident. This is particularly useful for emigrants who have retained their UK home for a couple of years. This quirk has been addressed and CGT will be imposed on residential property sold by UK non residents from April 2015. Precise rules on how this will work will be consulted in 2014; presumably the main residence exemption will be available but –
A second announcement on CGT shortens the exemption period at the end of the ownership of your main home. This exemption meant that you had 3 years to sell your main residence after moving out before CGT would be charged. From 6 April 2014 this period is halved to 18 months only.
It is important that if you are affected by either of these changes you contact Victoria on 01900 603623 to discuss the impact of the changes on your plans.
The Annual Exemption – the profit you are allowed before CGT is charged – increases to £11,000 for 2014/15 and to £11,100 for 2015/16.
“Supporting Small Business”
A document has been issued titled “Supporting Small Business” which details how H M Revenue & Customs is becoming more “user friendly.”
Whilst a lot of this is waffle, it does promise new systems which will allow robinson+co to deal with your affairs more easily:
• A more straightforward authorisation process
• Easier access to client records, such as payments made (or not as the case may be!)
The systems will only begin to be developed in 2014 though, so there may be a bit of a wait.
The document also details the NIC relief announced in the 2013 Budget - all employers will receive a £2,000 allowance against their employer’s NIC for 2014/15.
In addition employer’s NIC has been abolished for the under 21s from April 2015, as long as they do not earn more than (currently) £797 per week.
In the Statement the Chancellor also announced various measures in respect of business rates
1. That business rate increases will be capped at 2% for the next two years.
2. For small shops and food and drink premises, there will be a £1,000 business rates discount where the rateable value of the property is less than £50,000, and
3. The Small Business Rate Relief will be doubled for a further 12 months from 1 April 2014
4. There will be a 50% reduction of the rates for 18 months when premises have been vacant for more than one year.
Numbers to note for 2014/15
• The ISA limit will be £11,880 – of which £5,940 can be invested in cash
• The Junior ISA limit will be £3,840
• Class 2 NIC will increase – figure still to be announced
• State pension will increase by £2.95 per week
As is normal there are a myriad of measures aimed at reducing tax evasion and avoidance (the latter being completely legal!), but the big headlines are coming from the non-tax matters:
• the ever increasing state pension age;
• free school dinners for the first 3 years at primary school;
• the abolition of the car tax disc from 1 October 2014
• the freezing of fuel duty for the remainder of this government
If you have any queries about any of the measures announced today please do not hesitate to contact Victoria on 01900 603623 or firstname.lastname@example.org.
These notes are not a full resume of the Autumn Statement issued on 05 December 2013
• All care has been taken in preparing this material. However no responsibility can be accepted for any losses arising to any person acting or refraining from acting as a result of this material
• Any comments are those of Victoria Bishop and do not necessarily reflect the views of robinson+co