George Osborne today delivered his first Autumn Statement as Chancellor of a standalone Tory government. But he should be used to this by now as it was his third pronouncement of the year, the first being his pre-election Budget in March and then his summer Budget in July.
The big headlines in the Autumn Statement today though were his ‘About turn’ on Child Tax credits, the increase in Stamp Duty Land Tax on buy to lets and a HUGE increase in the London Help To Buy Scheme.
Child Tax Credits
The ‘About Turn on Child Tax Credits’ in todays Autumn Statement isn’t quite what is seems though. Child tax credits will STILL be barred from being claimed by families for more than two children. This rate is worth £2,780 per child and the ‘family element’ of £545 a year is also still being scrapped. Officials at The Treasury have confirmed only two measures are being reversed, these are changes to the income threshold and taper rate for working and child tax credits.
Stamp Duty
The increase in Stamp Duty Land Tax for Buy To Let Properties was a bit of a shock in todays Autumn Statement. The new top-up stamp duty, 3% above the current rate, is aimed at Buy To Let Landlords, but it also applies for those who buy a second property. Here’s a tax-tip though, if you’re an unmarried couple, buy properties in individual names.
Help To Buy Scheme
Good news in the Autumn Statement came today for London house buyers. A new Help to Buy equity loan scheme for London will give buyers 40% of the home value from early 2016, as opposed to 20%, as the current scheme offers. The Government is also announcing a series of other schemes, including Help to Buy: Shared Ownership in an attempt to to help people get on the housing ladder.
Pensioners get an extra boost
Pensioners gain a litle from todays Autumn Statement. From April 2016, the basic state pension will rise to £119.30 per week, an increase of £3.35, grandad can have an extra 3/4 of a pint. This will be the highest real terms increase to the state pension for 15 years
Good news for apprenticeships
In the Summer Budget, it was announced that three million new apprenticeships will be created by 2020, funded by a levy on large employers. The Autumn Statement confirmed that the apprenticeship levy will come into effect in April 2017, at a rate of 0.5% of an employer’s pay bill. A £15,000 allowance for employers will mean that the levy will only be paid by employers with pay bills over £3 million. It is estimated that less than 2% of UK employers will pay the levy.
Strangle the claim culture
One of the better low cost high impact messages in the Autumn Statement was to tackle the ‘claim culture’.To make it harder for people to claim compensation for exaggerated or fraudulent whiplash claims, the government is ending the right to cash compensation. More injuries will also be able to go to the small claims court as the upper limit for these claims will be increased from £1,000 to £5,000. This means that annual insurance costs for drivers could fall by between £40 to £50 a year.
Bigger fines for tax avoidance schemes
The Autumn Statement confirmed the Governments opinion on tax avoidance. The Government will introduce a new penalty of 60% of the tax due to be charged in all cases successfully tackled by the General Anti-Abuse Rule (GAAR) and will make small changes to the GAAR’s procedure to improve its ability to tackle marketed avoidance schemes.
Help for Working Parents
The Autumn Statement does have great new for working parents. From 2019-20, the government will spend over £6 billion a year supporting parents with their childcare costs. This includes doubling the free childcare entitlement from 15 hours to 30 hours a week for working families with three and four-year-olds from September 2017, worth up to £5,000 per child. It also includes introducing Tax-Free Childcare from early 2017, providing up to £2,000 a year per child to help working parents with their childcare costs. This means that, starting from 2017, a family with two children can begin to claim childcare support worth up to £40,000 through free hours and Tax-Free Childcare by the time both children are at school. The Autumn Statement and Spending Review sets an upper-income limit per parent of £100,000 and a minimum weekly income level per parent equivalent to 16 hours (worked at the National Living Wage) to the extended free childcare entitlement and Tax-Free Childcare. This saves £215 million by 2020-21.
Simplified Tax
The Govenerment continued its remit to try and make tax simpler in todays Autumn Statement. To reduce the Tax Administration burden the Government is investing £1.3 billion to transform Her Majesty’s Revenue and Customs (HMRC) into one of the most digitally advanced tax administrations in the world, with access to digital tax accounts for all small businesses and individuals by 2016-17. By 2020, require most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account.
Auto Enrollment
Business get a small reprise in the Autumn Statement. Rises to the auto-enrolment minimum contribution rate have been pushed back by six months to April 2018. Previously, the minimum employer contribution rate was set to rise to 2% in October 2017 to bring total minimum contributions to 5%. It was then due to rise to 3% for employers in October 2018 to bring the total minimum contribution to 8%. However, the new rules mean the rate first rise will be introduced in April 2018. The next rise will be introduced in April 2019.
Capital Gains Tax on residential properties
Capital Gains Tax (CGT) due on residential property is currently paid between 10 and 22 months after a disposal is made, which is out of alignment with those who pay income tax. To address this, the Autumn Statement introduced a requirement for the capital gains tax due to be paid within 30 days of completion of any disposal of residential property. This requirement will be introduced from April 2019 to ensure that HMRC’s digital systems are ready to provide support, making paying this tax simpler and quicker for taxpayers.
Council Tax ‘Bolt Ons’
The Autumn Statement gives power to local authorities to charge an extra 2.5% on council tax to be spent on local social care, such as care homes.