Autumn Statement 2014 – key points and changes

If you have an upcoming assessment center or interview, or are just curious about the 2014 Autumn Statement, then this blog will be of interest to you.

George Osborne commenced the delivery of his Autumn Statement to a somewhat rowdy Chamber by outlining the state of the economy, all of which looked pretty positive, and reeling off the following stats:

  • The UK is the fastest growing economy in the G7 countries
  • 2014 Growth has been forecast at 3% (up from 2.7% in March)
  • Inflation is set to fall to 1.2% in 2015,
  • 500,000 new jobs have been created, of which 85% were full-time
  • Consequently, unemployment is set to fall to 5.4% in 2015.

The key points of the 2014 Autumn Statement are summarised and grouped under the general headings below. The broad groupings provide an easy-to-follow guide as well as highlighting the important changes and announcements

Corporate taxes – changes to these will be relevant to anybody applying for a role in corporate tax. The corporation tax rates are converging towards a single rate of 20% and today the following changes were announced:

  • 25% tax for multinational companies on profits made in the UK that are shifted offshore to lower tax jurisdictions – this is forecast to raise an additional £1bn over the next 5 years – the upshot of the Google and Starbucks fiascos!
  • Research & Development tax credit increases for small and medium sized businesses
  • £45m support package for exporters
  • Small and medium sized business to receive support of £500m from bank lending and £400m of government-backed venture capital funds
  • Theatre tax breaks to be extended to orchestras
  • A new tax credit for children’s TV producers

Stamp duty – previously based on a percentage of the total property cost, but with house prices rising many homes were pushed into new brackets of tax. As a result:

  • Stamp duty legislation is to be reformed as of midnight Thursday, 4 December, so that the tax only applies to the part of the property within each band – 98% of homeowners are predicted to benefit.
  • 0% stamp duty on properties up to £125,000 and 2% on the section up to £250,000 (anyone one buying a house should be interested)
  • 5% up to £925,000; 10% up to £1.5m and 12% on anything above this

Personal taxes­ – all of these points should interest trainees and graduates about to enter the working world, especially those working within personal tax. Changes were announced in the Budget back in March, and these have been continued with the following:

Tax free personal allowance raised to £10,600 as of next year

  • Higher rate band (40%) also raised going up to £42,385
  • Spouses will be able to inherit their husband or wife’s ISA and pension tax free
  • Aid workers who lose their lives dealing with a humanitarian emergency will be exempt from inheritance tax
  • New £90,000 charge for non-domiciled residents who have been in the UK for 17 of past 20 years

Infrastructure and travel – predominantly focusing on housing and transport, two of the main changes had already been announced:

£1.5bn for 84 road projects

  • £2bn to improve flood defences
  • Rail improvements to Northern Rail and Trans-Pennine Express services
  • Fuel duty frozen
  • Air passenger duty for children under 12 abolished from next year, and for children under 16 the year after

Health, education and welfare – additional funding  has been announced in key political areas:

NHS to receive £2bn additional funding each year until 2020

  • GP services to receive £1.2bn additional funds paid for by the banking foreign exchange manipulation fines
  • Post-graduate loans for students studying masters degrees of up to £10,000 from 2016/17.
  • National insurance on young apprentices to be abolished
  • Employment allowance to be extended to carers
  • Wages will grow faster than inflation for the next 5 years
  • Welfare spending is to be £1bn lower than forecast in March
  • Two year freeze in working-age benefits
  • Migrants will lose their entitlement to unemployment benefits if they have no prospect of work after six weeks

Borrowing – one of the key issues for the government, and the issue upon which the Chancellor asked to be judged. The deficit is a big factor in determining tax rates and government spending, and is forecast to move as follows:

  • 2013/14 – £97.5bn
  • 2014/15 – £91.3bn
  • 2015/16 – £75.9bn
  • 2016/17 – £40.9bn
  • 2017/18 – £14.5bn
  • 2018/19 – £4bn surplus
  • Charter for Budget Responsibility is to be published and voted upon in the new year

I hope you found this useful and if you have any further questions or for further updates, read Rhys’ blog and follow me on Twitter @GT_Edward.

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