So it’s only 21 days until Christmas but more importantly for us accountants only 8 weeks until the tax return deadline! Remember that the new rule is that if your tax return is filed late you will still be fined £100 even if you have no tax to pay.
Those of you who read last months column will know my business partner Michael took part in Movember to raise awareness and much needed funds for mens health issues in general, particularly testicular and prostate cancer. Well, with his Freddy Mercury inspired moustache he smashed his £500 target by raising £640!
Yesterday Chancellor George Osborne delivered his much anticipated final Autumn Statement before the 2015 General Election. The Autumn Statement is all about tax and a raft of new, very welcome initiatives were announced.
It was interesting to know that the UK is now expected to grow faster in 2014 than any other developed economy and that the UK should be in a surplus position by 2018/19. However it is clear from his speech that public finances still need some work. A couple of surprising but somewhat necessary announcements were the 25% tax charge on profits made by multinationals in the UK but then diverted offshore and limiting the losses the banks can offset against tax to 50%.
Here are the most notable changes for businesses and individuals –
Individuals
Stamp Duty
The old residential stamp duty ‘slab’ scheme has been replaced by a marginal rate scheme. So now rates will only apply to the proportion of the property price that falls within each band. The rate will be 0% on the first £125,000 then 2% on the portion up to £250,000, 5% on the portion up to £925,000, then 10% on the portion up to £1.5m and 12% on anything above that. 98% of property sales will be cheaper under the new scheme and only those buying homes costing more than £937,000 will pay more.
Income Tax
The personal tax allowance will increase to £10,600 a year from April 2015. This is £100 more than was previously announced. The higher rate threshold will rise from £41,865 this year to £42,385 next year.
Although the Chancellor did not mention it, there is another change to personal allowances from April 2015. It relates to the transferable tax allowance, whereby a spouse or civil partner will be entitled to transfer up to £1,060 of their personal allowance to their spouse or civil partner. This will only apply where the transferor is not liable to income tax or not liable above the basic 20% rate for a tax year, and provided the recipient of the transfer is not liable to income tax above the basic rate.
ISA’s
ISA’s can now be inherited by your spouse tax free. Previously, a surviving spouse or civil partner would inherit an ISA free of inheritance tax but would lose the benefit of any income tax advantages from the ISA.
The annual ISA allowance will increase from £15,000 to £15,240 a year from April 2015.
Pensions
As I mentioned in a previous article, it has been confirmed that the 55% death tax on unused inherited pension pots will be scrapped from April 2015. Savers will be able to access funds in their defined contribution pension schemes as they wish at the point of retirement, charged at their marginal rate of income tax rather than the current 55% charge for full withdrawal.
In addition people who die before they are 75 will be able to pass on joint life or guaranteed term annuities tax free. Previously those who benefited from an annuity income after their partner died paid income tax on it.
Air Passenger Duty & Fuel Duty
The duty on flights for the under 12’s will be abolished from May 2015 and the under 16’s from March 2016. This will save a family of four £26 on a flight to Europe, and £142 on one to the US. Easyjet said that it would “proactively refund” passengers who have already bought tickets to fly after April 2015.
The freeze on fuel duty will continue for another year.
Businesses
Business Rates
Rising rates have been blamed in part for the decline of high street shopping in towns and cities as traders struggle to compete against online retailers. As such, the Chancellor announced that the doubling of the small business rate relief will continue for another year and the inflation linked increases to business rates will be capped at 2%. The business rates discount for certain high street shops will increase by 50% to £1,500.
There will also be a review of the structure of business rates.
National Insurance
Businesses will not have to pay national insurance contributions when they hire apprentices who are under 25, up to the upper earnings limit (£815 per week for 2015/16).
National insurance contributions for employing anyone under 21 will be abolished from April 2015.
Research & Development
For small and medium sized enterprises the R&D rate will increase from 225% to 230%. It is hugely surprising how many UK companies can qualify for this tax relief but do not know to apply for it. As such a new advance assurance scheme will be introduced for small businesses making their first claim for R&D tax credits.
For large enterprises the above the line credit will increase from 10% to 11%.
Conclusion
Even though some critics will bemoan the fact that the deficit is not reducing as quickly as predicted and that public spending is set to fall even further, the Autumn Statement has outlined a number of initiatives that are definitely welcomed and will mean more money in peoples and businesses pockets. Always a good thing!
Important dates for your diary – Key dates coming up. Tax returns filed online have a deadline of 31 January 2015. Company accounts with a 31 March 2014 year end need to be filed at Companies House by 31 December or a £150 fine will be incurred for late filing! Quarter ended November VAT returns to be filed and paid by 7 January and November PAYE to be paid by 19 December.
I hope you found this article useful. Please remember to interact with me and let me know if you want anything covered in the next article.
My email address is hannah@timeaccounts.co.uk or you can follow my firm on Twitter @timeaccounts or visit our business Facebook page (Facebook/timeaccounts). Remember to like our page so you can keep on top of tax saving tips, deadlines and general Time Accounts updates.
See you next month. New Years column coming Thursday 8 January 2015!
Time Accounts t/a Time Business Services are a local Sussex based chartered accountancy practice dealing with all aspects of small, medium enterprises and their financial requirements, so just pick up the phone and call 01273 446595 or send us a call back request via our website Time Accounts and we’ll do the rest!
