What the Chancellor had to say in the 2014 Autumn Statement
The key announcements at a glance
Chancellor George Osborne delivered his Autumn Statement 2014 to Parliament on 3 December(2014). Much of the commentary focused on weak public sector finances data in the context of strong GDP and employment growth.
While the Autumn Statement 2014 was viewed by many as representing a political success for the Chancellor, the Office for Budget Responsibility (OBR)’s forecasts were seen as providing a sober reminder of the fiscal constraints that the winner of the May general election faces. (In this article, all references to married couples include registered civil partners). These were Chancellor George Osborne’s key announcements:
3% growth forecast in 2014, up from 2.7% predicted in March 2014.
2.4% growth forecast in 2015, followed by 2.2%, 2.4%, 2.3% and 2.3% in the following four years.
500,000 new jobs to be created this year, 85% of
new jobs full-time.
Unemployment set to fall to 5.4% in 2015.
The Office for Budget Responsibility (OBR) forecasts inflation to be 1.2% in 2015 and 1.7% in 2016 before returning to the Bank of England’s 2% target in 2017.
Deficit ‘cut in half’ since 2010.
Borrowing set to fall from £97.5bn in 2013/14 to
£91.3bn in 2014/15.
Deficit projected to fall to £75.9bn in 2015/16, £40.9bn in 2016/17, £14.5bn in 2017/18 before reaching a £4bn
surplus in 2018/19.
By 2019/20 Britain will have a surplus of £23bn.
Debt as a share of GDP to rise to 81.1% this year before falling in every year, reaching 72.8% in 2019/20.
Stamp Duty Land Tax (SDLT)
Reform of residential property stamp duty cut for 98% of people buying a new home.
Rates apply only to that part of the property price that
falls within each band.
0% paid for the first £125,000, then 2% on the portion up to £250,000; 5% up to £925,000, then 10% up to £1.5m; 12% on anything above that, saving £4,500 on an average-priced home.
Personal tax-free allowance increased to £10,600 from
6 April 2015.
Higher-rate tax band increased to £42,385 from 6 April 2015.
When someone dies, the surviving spouse will be able to inherit their Individual Savings Account.
Tax-free annuities for dependants of people who die
New £90,000 charge for those not domiciled, that have been resident in the UK for 17 of the past 20 years.
The Government will continue consulting on whether to restrict the income tax personal allowance for non-residents – there will be no change before April 2017.
New inheritance tax rules introduced to target avoidance through the use of multiple trusts and simplify the calculation of trust taxation.
Inheritance tax exemption for members of the armed forces whose death is caused or hastened by injury while on active service will be extended to include members of the emergency services and humanitarian aid workers responding to emergency circumstances.
Individuals will be prevented from claiming capital gains tax entrepreneur’s relief on disposals of goodwill when they transfer the business to a related close company. This affected transfers on or after 3 December 2014.
Savings & Pensions
New Individual Savings Account threshold allowance increases from £15,000 to £15,240 on 6 April 2015.
From 6 April 2015, surviving beneficiaries of joint life annuities and the recipients of guaranteed annuity benefits will no longer have to pay tax on the payments if the original policyholder dies before turning 75.
The basic State Pension will be increased by 2.5%. The standard minimum income guarantee in pension credit will rise by the £2.85 a week cash increase in the basic State Pension. The full single-tier State Pension will rise to at least £151.25 per week.
Health & Education
£2bn extra every year until 2020 for the NHS.
GP services to receive £1.2bn in extra funds from bank foreign exchange manipulation fines.
Employment Allowance worth £2,000 extended to carers.
£10,000 loans for postgraduate students studying for masters degrees.
Two-year freeze in working-age benefits (first announced in October 2014).
Migrants to lose unemployment benefits if they have ‘no prospect’ of work after six weeks.
Energy & Fuel
Fuel duty frozen.
Sovereign wealth fund for north of England to keep benefits of shale gas exploration.
Reduction in oil industry supplementary charge from 32% to 30%.
Business rates to be reviewed.
25% tax on profits from activity in the UK for companies that shift profits offshore will raise £1bn over the next five years.
Research and development tax credit increased for small and medium-sized (SME) firms.
Support extended to small businesses with £500m of bank lending plus £400m government-backed venture capital funds which invest in SMEs.
£45m package of support for exporters.
Expand tax relief on business investment in flood defences.
National Insurance on young apprentices abolished.
New relief effective from April 2015 will be introduced, allowing individuals who lend through peer to peer (P2P) platforms to offset any losses from loans which go bad against other P2P income.
The Autumn Statement has been heavily scrutinised by the media and has been considered as playing politics for election as opposed to easing the countries finances by many. We are not here to pass judgement, however we are here to provide information and advice you on how any of the changes may affect you.