We are coming to expect a big tax flourish in the Autumn Statement, and with a General Election just around the corner, George Osborne couldn’t resist another one. Abolishing the slab system of residential stamp duty is a real headline grabber. The result should be lower stamp duty for 98% of house purchases, while the 12% rate on the proportion of value above £1.5m may appease mansion tax advocates.
It was no surprise that tax evasion and avoidance featured heavily in this year’s speech. The 25% tax on profits generated by multinationals in the UK – if those profits would otherwise be diverted elsewhere – is an innovation. Wealthy non-doms are also being targeted. Individuals who have been in the UK for 12 of the last 14 years will have to pay an increased charge of £60,000 to preserve their status. Those resident in the UK for 17 out of the last 20 years will be charged £90,000.
There were words of encouragement for businesses, as the Chancellor announced a full review of the structure of business rates, the abolition of national insurance contributions on payments to young apprentices, and increases in the R&D tax reliefs for small and large firms. Science and creative sectors are also being supported. For example, a new children’s television credit will be introduced, aligned to the existing animation credit – an irresistible opportunity to name check Wallace & Grommit and raise a laugh from all sides of the House.
Savers also received a boost. The increase in the ISA allowance to £15,240 may be modest, but many taxpayers will welcome the ability for ISAs to retain their tax-free status when inherited by a husband or wife after the death of their spouse.
These are just a few highlights. There is a surprising amount of detail to work through, and we will also have a good look at the Finance Bill when it is published next week.
Traditionally the Autumn Statement is used to give an economic update, and George Osborne did spend a lot of time on deficit calculations and growth predictions, arguing the case for the strength of the British economy. We can look forward to plenty more arguments – on economic indicators and tax policies – in the run up to May’s election.
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