AUTUMN STATEMENT 2014
Are Autumn Statements that interesting ? This one might be !
It will be George Osborne’s fourth Autumn Statement and the announcements are traditionally focussed on government spending. However, with the General Election less than six months away, there may just be a greater emphasis on tax this year.
The good news for the Government is that spending is more or less on target. The less pleasing news is that public borrowing is greater than anticipated and while tax receipts are growing they are much weaker than hoped for. The poor tax receipts are a consequence of salary stagnation, the growing number of self- employed and low earners and the cooling property market. These all add up to less tax being brought into the public purse. That may suggest measures designed to encourage an increase in wages and therefore taxes – possibly a further increase in the national minimum wage and a raising of tax thresholds ?
Writing just over a week before the Statement I would expect to see developments in the following area’s:
• Clarification of the future treatment of pension death benefits and possibly the abolition of the contribution ceiling at 75. Important for those over 50 !
• Clarification on the reform of the relevant property regime for trusts. Important for anyone focussed on inheritance tax planning !
• Amendments to the rules on personal allowances for non-residents. Important for non- UK resident landlords !
• Changes to the National Insurance Contribution regime to reflect the single tier state pension in 2016. Important for anyone of working age !
There may even be announcements in the following area’s:
• A possible exemption from National Insurance Contributions for businesses taking on apprentices.
• A potential export tax credit to encourage businesses trading outside of Europe. The Government has a target of doubling exports by 2020 and it is unlikely that Europe will contribute significantly to that objective as things stand. Measures to encourage exporting to other geographical area’s can therefore be anticipated.
• A stated intention to raise the 40% tax threshold … but probably not to take place until the next Budget at the earliest if not sometime after 7th May 2015.
Beyond that, the Governments desire to offer tax breaks must be constrained by the position of the economy.
Don’t hold your breath but there have been suggestions of a rise in the Inheritance Tax nil rate band which is currently £325,000 … which it has been for some years. The Office for Budgetary Responsibility has indicated that the number of estates attracting inheritance tax will double from one in twenty at present to one in ten by April 2019 if things are left as they are. I would think that this is more aspirational than anything else although the announcement of a modest change in the threshold in the Autumn Statement cannot be ruled out. If you are concerned with the impact of inheritance tax on your family it may therefore be worth keeping an eye on this Statement.
So nothing too radical but, with 7th May 2015 on the horizon , the Autumn Statement may represent a showcase for future policies which is simply too tempting for the Government to resist. It will therefore make more interesting listening and reading than those of the last few years.