Autumn Budget 2014
I'm not sure how George Osborne can still call this the Autumn Budget statement as we're now in December, but I'm sure the powers that be have got their facts right!
Anyway, you’ve probably seen all the details in the newspapers and on TV so we won’t spoil your Friday afternoon by repeating all the details again here.
However, we will mention a few items that may impact on your business. Rather than sit on the fence and give you a load of facts and figures, we’ve decided to offer our own personal opinion, albeit slightly tongue in cheek.
So here goes…
STAMP DUTY LAND TAX (‘SDLT’)
This has been altered to a progressive rate for all sales completed from now on. For those property purchases costing £935,000 or less, there will be a saving. However those purchases above this figure will be subject to higher SDLT.
George seems to have headed off any more discussions about the dreaded ‘mansion tax’ so grannies who live in Chelsea and former pop stars will be happy. However could this measure add further fuel to the UK’s already over-heated property market?
DIVERTED PROFITS TAX
This is a new tax to counter the use of aggressive tax planning techniques used to divert profits away from the UK (hello Google and Starbucks).
The tax will be levied at 25% from 1 April 2015 although unfortunately details on how this will be applied have not yet been released.
Is George just playing lip service to the man in the street? It remains to be seen how this will be enforced in practice.
Call us cynical but we suspect the full details may not be available until after next year’s General Election.
RESEARCH & DEVELOPMENT TAX CREDITS
The Research & Development Tax Credits paid to small and medium sized companies will increase from 125% to 130% of ‘qualifying expenditure’ incurred after 1 April 2015. This is good news for start-up businesses and will help boost their much needed cash flow in the early years.
The credit for large companies however is also being increased from 10% to 11%.
Is George playing Robin Hood in reverse and taking with one hand and using sleight of hand to give back to big business (see above)?
INCOME TAX PERSONAL ALLOWANCE
This will increase to £10,600 for the 2015/16 tax year. Again this is good news as it’s higher than previously advised by the government, though it’s a classic politician’s trick. After all, it’s always a good idea to offer some tax cuts just before the polling booths open.
AIR PASSENGER DUTY
This is being scrapped on economy flights for those under 12 years old with effect from 1 May 2015. The relief will extend to under 16’s from 1 March 2016 and tickets will be expected to display the amount of duty payable to ensure that the savings are passed on.
Is this another token gesture for George’s ‘hard working families’?
Sadly it doesn’t address the premium families pay for flying abroad in the summer holidays. Fortunately we don’t have this problem as our eldest is like ‘Mr T’ and hates flying.
Last and by no means least, Entrepreneurs’ Relief will be removed for individuals in respect of the transfer of goodwill to their own company and Corporation Tax reliefs will be restricted for payments in respect of these intangible assets.
This could be a big blow to businesses looking to grow who start as a sole trader or partnership and then decide to incorporate as a limited company. These small businesses could miss out on some very nice tax savings as a result of this change.
It also seems to contradict the Coalition’s claim to be supporting smaller business and entrepreneurs.
If you’d like more advice on how the proposed changes in the Autumn statement might affect your business or would just like to chat about our irreverent take on George’s proposals feel free to email our friendly tax adviser at [email protected].