The 2014 Autumn Statement was formulated, unsurprisingly, with more than half an eye on the General Election next May. The high-end property market, wayward banks and tax-shy companies all found themselves in the line of fire and these measures helped to divert attention away from the fact the government had not hit its target to reduce the financial deficit.
Reforms to stamp duty on residential property grabbed the bulk of the media headlines. Chancellor of the Exchequer George Osborne introduced a new tiered system, in which rising rates of stamp duty will be charged in incremental steps. As a result, stamp duty will fall for 98% of house buyers and only those buying properties priced over £937,000 will pay more under the new system.
The annual allowance for individual savings account (ISA) contributions was increased from £15,000 to £15,240 from April 2015 and, in a welcome move for savers, new rules will allow spouses to inherit their partner’s ISA free of tax following their partner’s death.
In a more controversial move, the Chancellor clamped down on multinational companies that generate corporate profits in the UK, which are then diverted overseas. These profits will be subject to what is described as a ‘Google Tax’ at 25% and the change is expected to raise £1bn over the next five years.
Elsewhere, Osborne introduced a new £90,000 charge for people who have lived in the UK for 17 of the past 20 years but who claim non-domiciled status for tax purposes.
On a positive news the UK is the fastest-growing of all the ‘G7’ group of wealthiest economies and growth this year has proved stronger than expected. The Office for Budget Responsibility (OBR) increased its forecast for the UK’s economic expansion during 2014. Looking ahead, growth is expected to slow, but maintain headway. The downside is that spending and borrowing is still higher than income so there will likely be more cuts to certain benefits or services which will affect everyone…
Looking further ahead, there is a forecast surplus within the economy which favors investors over the medium and long term.
If you would like to discuss the impact of the budget, please get in touch with the team at Platinum.