Autumn Statement 2014 – Highlights

With a general election now in sight, Chancellor George Osbourne delivered his Autumn statement last week to set out the plan he believes will maintain the country’s economic recovery and possibly enhance his party’s chances of retaining power.

The Autumn Statement 2014 felt very much like a mini-Budget, with several major new provisions and many other measures outlined.

Here are some of the highlights which may have effect businesses and business owners:

Capital Gains Tax

Individuals will be prevented from claiming Capital Gains Tax Entrepreneur’s Relief on disposals of goodwill when they transfer the business to a closely related company.

National insurance contributions and employee tax

Employer NICs up to the upper earnings limit will be abolished for apprentices aged under 25 from April 2016.

Research and development (R&D) tax credits

As of 1 April 2015, the rate of above-the-line credit for qualifying R&D expenditure will be raised from 10% to 11% and the rate for the small and medium enterprise scheme will be increased from 225% to 230%.

Corporate Debt

There will be broad-ranging changes to legislation on corporate debt and derivative contracts, including a clearer and stronger link between commercial accounting profits and taxation, basing taxable amounts on items of accounting profit or loss.

Personal tax avoidance

A number of anti-avoidance measures were announced, including the removal of special-purpose share schemes. All returns made to shareholders through such schemes will be taxed as dividends.

Legislation will be introduced for enhanced civil penalties for offshore tax evasion, with changes coming into effect in April 2016.

The Chancellor also outlined provisions as part of the devolution initiative, with Manchester appearing to be the main benefactor. Manchester looks set to head up the ‘Northern Powerhouse’, which will see improved transport links and business opportunities across the North of England.

Whilst on the whole the Government’s pro-business agenda shone through once more, particularly in the investment in the ‘Northern Powerhouse’ initiative, the hot topic of tax avoidance has clearly resulted in a strategy of public vote-winning announcements to gain votes in the upcoming General Election.

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