Autumn Statement 2013 summary

These days the Autumn Statement rivals the more traditional Spring Budget for tax announcements and changes. This year was no exception and this article summarises our highlights from the day:

  • State Pensions– We knew the state pension age was due to increase, but it this is likely to come sooner than expected– rising to 68 by the mid 2030s and again to 69 by the late 2040s. In the shorter term, for those at retirement age now, the State Pension will increase by £2.95 a week from April 2014.
  • Private Residence relief - Private residence relief gives relief for people selling property they have lived in as their main home. At present, provided you’ve lived in a house as your main residence at some point during your ownership, you are allowed claim relief for the last three years of ownership whether you were living there or not. This allows people time to sell their property after they have moved out. From April 2014 this three year period will be cut to 18 months. The reasoning behind this is to reduce the benefit of the relief to people with more than two properties. 
  • Capital Gains Tax for Non Residents - Non-resident individuals don’t generally pay any Capital Gains Tax on gains on UK assets, although they can be charged if they are only non-resident for a short period of time. From April 2015 all non-residents will pay Capital Gains Tax on residential properties. A consultation on how to achieve this will be published in early 2014. The issues here will presumably include the question of how to enforce the charge on someone who is living outside the UK.
  • National Insurance – A proposal to scrap Employers NIC for employees under 21 was a new announcement. Don’t forget that the Employment Allowance announced in the Budget 2013 is due to come in from April 2014. This is worth up to £2,000 for Employers.
  • Trust Simplification and Inheritance Tax – The taxation of Relevant Property Trusts is a very complex area and in the March 2013 Budget a review was announced. It has now been confirmed further consultation will take place. The proposal is to share the Inheritance Tax Nil Rate Band available between all a settlor’s trusts, with plans to legislate with effect from 2015. This would bring to an end the benefit of creating pilot trusts. It will also potentially increase Inheritance Tax charges on families with multiple trusts.
  • Business Rates - The current business rates system has received a lot of criticism in the last couple of years, with small retailers particularly feeling the pinch. A number of measures have been announced including a special relief for retail and food & drink premises worth up to £1,000pa, a further extension of the current Small Business Rate Relief scheme for a further year and a new relief worth up to 50% of the rates for the first year for businesses moving into empty premises.
  • Corporation Tax - There were no further changes announced in the Autumn Statement to the Corporation Tax rates that were announced in the March 2013 Budget. Therefore the main Corporation Tax rate falls from 23% to 21% from 1 April 2014. The rate for companies with small taxable profits (under £300,000 for a single company) continues to be 20%. With effect from 1 April 2015 the main Corporation Tax rate drops to 20% and so there will be one rate of Corporation Tax from April 2015.
  • Employee Share Ownership - Giving employees a meaningful stake in the business they work for can help companies to be more successful. Two particular measures announced targeting Share Incentive Plans and Save as You Earn Schemes are to be welcomed but relate to schemes used mainly by large employers. For family businesses the changes to Enterprise Management Incentives in the Budget earlier this year will often be a more useful scheme to incentivise and retain key employees.

Helen Thornley, Tax Consultant

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