bannerImage.png

Beyond the balance sheet

Revealing 8 important items from the Autumn Statement 2015

Kathleen Parker 02/12/2015 4 minute read

Kathleen Parker FCCA analyses the key areas you need to know about for your business and personal finances from the Chancellor's announcements.

The Emergency Budget 2015 revealed that whilst the minimum wage would rise to a living wage, there would also be cuts to tax credits as part of the process of moving people off welfare and into higher paid employment. It became clear over time that the planned cuts to tax credits would have a significant impact on low paid workers.


The House of Lords subsequently backed a motion to delay the cuts until a revised plan was put in place so as to introduce them in a more gradual manner. It looked as though Osborne would be faced with looking at other areas to wield the knife and achieve savings. However, a £27bn windfall from lower government debt servicing charges has eased the pressure and provided the Chancellor with some room for manouvre. 

 

Here are the key announcements from the Autumn Statement 2015 that you need to be aware of for your business and personal finances.

  • 1. Public spending cuts

After-inflation cuts to public spending have been reduced. In the Emergency Budget they were expected to be £17.9bn by 2020 however, this figure has now been reduced to £10.4bn.

There have been several spending announcements around defence given the terror threat and the police budget has now been protected from all real-term cuts. The NHS must still achieve £22bn in efficiency savings but will now receive £6bn immediately as part of a promised £8bn budget.

  • 2. Property and buy-to-let taxation

The Chancellor appears to be sending out a very clear message to buy-to-let investors and those purchasing second homes. In essence, you’ll be taxed more. That’s because from April 2016 stamp duty land tax (SDLT) will be increased by 3% for purchases of buy-to-let and second properties over the value of £40,000.

The government’s argument is that the purchase of second homes and investment properties is making life harder for first time buyers to get on the ladder. As of April 2019 any capital gains tax due on the sale of property will have to be made as a payment on account and within 30 days of disposal.

  • 3. Home building and shared ownership schemes

The housing budget will increase to £2bn to fund the building of 400,000 new homes by 2020. Restrictions on who can access shared ownership schemes will be removed and government land will be released. This is said to be suitable for up to 160,000 homes.

  • 4. ISAs

With the very low rate of inflation, ISA limits will remain at their 2015/16 levels. The government has also launched a consultation as to whether to include investment based crowdfunding as part of the tax free wrapper.

  • 5. Cuts to tax credits scrapped

There will be no scale down of the proposed tax credit cuts. Instead the plan will be scrapped altogether. This may not be as significant as it at first sounds. You see, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit and Housing Benefit are all being merged into one single monthly payment anyway. This is known as Universal Credit and many of these tax credits will be phased out by 2020 as part of the process.

Of note, there is a cut to tax free childcare. The maximum amount of income a parent can earn to qualify for tax free childcare is to drop from £150,000 to £100,000. Meanwhile the weekly minimum each parent has to earn rises to £125. 

  • 6. Pensions

The government have tried to simplify the administration of auto enrolment for small businesses. The next phases of minimum contribution rate increases are to be brought in line with the tax years. That means increases won’t happen in October as they had been planned, instead they will take place at the beginning of the tax year in April. 

  • 7. Company car tax

The three percentage point difference between diesel and petrol cars for company car taxation purposes will be retained until April 2021. The original intention was to abolish this in April 2016.

  • 8. Apprenticeship levy

An apprenticeship levy of 0.5% on company payrolls will commence in April 2017. It’s expected to raise £3bn a year and fund 3 million apprenticeships. However, only companies with a wage bill of more than £3m will make this contribution.

New Call-to-action

The content of this post is up to date and relevant as at 02/12/2015.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.

 

leave a comment -

Popular posts

8 Key elements of a business plan you need to know
How to understand the different types of shares & class of shares
What are the different types of business structures in the UK? How to choose one