George Osborne gave his annual “Autumn Statement” to Parliament on 3 December 2014. What does it mean for the “man on the street”?
Overall it was a generally positive statement, with a lot of the provisions being in favour for small businesses and basic rate tax payers.
However, there was some potentially bad news for sub-contractors who use umbrella companies that are not complying with Revenue rules. Some unscrupulous umbrella companies use loopholes to avoid tax, and the government are looking to bring regulations into the 2015 Budget to counteract this problem.
The tax free personal allowance will be increasing by £500 to £10,500 from April 2015. This means you will not pay any tax on the first £10,500 of your earnings. Earnings above that incur 20% tax and you’ll start paying higher rate tax of 40% if your earnings hit £42,285
The statement promises improvements to the CIS system which it says will reduce the administrative burdens on construction businesses. Details are to be published “shortly” though no time-frame has been given.
New stamp duty rules came in on 4 December 2014 making the charges a lot fairer. Homes under £125,000 are exempt from stamp duty. For residential properties costing more than £125,000, stamp duty is only paid on the excess rather than the whole cost. (The rules will be different in Scotland.) The new rates of stamp duty are:-
Purchase price of property New rates paid on the part of the property price within each tax band
£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1,500,000 10%
£1,500,001 and over 12%
So if you buy a home for £300,000, you will pay £5,000 stamp duty calculated as follows:-
- The first £125,000 is taxed at 0%
- The next £125,000 is taxed at 2%, which works out at £2,500 tax
- The last £50,000 falls in the 5% bracket which works out at £2,500 tax
Should maths not be your favourite subject, the Revenue have an online Stamp Duty Land Tax calculator http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm The Treasury believe that 98% of people buying residential property will save money on stamp duty; those spending more than £950,000 or so will be paying more, so you might want to hold off buying that ten bedroom mansion in the country you’ve had your eye on.
If you employ an apprentice, the government are abolishing employer National Insurance for apprentices aged under 25 on wages up to the upper earnings limit (currently £805 per week) as a means to make apprentices more affordable and to encourage more businesses to hire them.
Savers will be happy to know the ISA allowance is rising to £15,240 from April 2015.
One of the more bizarre announcements results in family holidays abroad becoming ever so slightly cheaper: Children under the age of 12 will become exempt from tax on economy flights from 1 May 2015. The age limit increases to under 16s from 1 March 2016. The average saving is £13 for a child to fly to Europe and £71 on a flight to the US. Whether that’s enough of a saving to get everyone rushing to lastminute.com remains to be seen.