Chancellor George Osborne has said that, despite claims to the contrary, the deficit has fallen and will continue to fall, that the UK is now the fastest-growing economy in the G7, and that the burden of any increased taxation should fall principally on the wealthiest members of society.
Economic Growth and Employment
Growth forecasts have increased:–
• from 2.7% to 3.0% for this year
• 2.4% growth forecast in 2015
• for the following four years to 2.2%, 2.4%, 2.3% and 2.3%
500,000 new jobs have been created this year. 85% of jobs created since 2010 are full-time.
Unemployment is set to fall to 5.4% in 2015
Borrowing and Debt
Borrowing is set to fall from £97.5billion in 2013-14 to £91.3 billion in 2014-15. The deficit is projected to fall to £75.9 billion in 2015, £40.9 billion in 2016 and £14.5 billion in 2017 before reaching a £4 billion surplus in 2018. By 2019-20 there is expected to be a surplus of £23 billion
Tax receipts in 2014-5 are forecast to be £23 billion lower than predicted.
World War One debt is to be repaid by 2019.
Stamp Duties
Stamp Duty Land Tax on residential transactions will become a progressive tax:
0% on the first £125,000.
2% on the amount between £125,000 and £250,000.
5% on the amount between £250,000 and £925,000.
10% on the amount between £925,000 and £1,500,000.
12% on the amount above £1,500,000.
For those who have exchanged contracts before 4th December 2014 the buyer can elect to be taxed under the existing rules or the new rules. Special rules apply for where the contract is already substantially performed but not completed.
The annual tax on residential properties owned through offshore companies will increase from 1 April 2015 by 50% above inflation for properties worth more than £2 million.
Savings
ISAs will be transferable to spouses and civil partners tax-free.
The annual ISA threshold will increase from £15,000 to £15,240 from 6th April 2015.
Personal and business taxation
The personal tax allowance will increase to £10,600 from 6th April 2015 and the higher rate threshold will increase to £42,385.
Air Passenger Duty for under-12s will be abolished from 1st May 2015 and for under-16s from 1st May 2016.
Relief will be introduced from Inheritance Tax on the estates of aid workers who die in the course of duty.
The annual charge for non-domiciles wishing to retain the remittance basis of taxation who have been resident in the UK for 7 out of the last 9 years will remain at £30,000. For those who have been resident for 12 out of the last 14 years this charge will increased to £50,000, and a new charge of £90,000 will be introduced for those who have been resident for 17 out of the last 20 years.
VAT currently paid by hospices and search-and-rescue organisations is to be refunded.
National Insurance contributions for apprentices under the age of 21 are to be abolished.
Business rates are to be reviewed.
The research and development tax credit for small and medium-sized firms is to be increased.
Pensions
The 55% tax on death for pension funds passed on to relatives is to be abolished.
Health and education
The NHS will receive £2 billion in extra funds every year until 2020.
GP services will receive £1.2 billion in extra funds from fines on bank foreign exchange manipulation.
Employment Allowance is extended to carers
The Government will make available loans of up to £10,000 for postgraduate students studying for masters degrees.
Energy and fuel
Fuel duty is to be frozen
A sovereign wealth fund is to be set up for the north of England to keep benefits from shale gas exploration
Tax Avoidance
Corporation Tax relief on the transfer of goodwill on incorporation is to be restricted with immediate effect.
Entrepreneurs’ Relief on transfer of a business to a “close company” is to be restricted with immediate effect.
Gains that are allowable for Entrepreneurs’ Relief but which are diverted into other approved investment schemes will be remain allowable for Entrepreneurs’ Relief on their future disposal, with immediate effect.
Legislation will be introduced in 2015 with effect from 3rd December 2014 to restrict loss relief on certain arrangements made with a view to avoiding income tax.
Rules on loans made to a UK company by a connected company in a non-qualifying territory are to be repealed.
The level of bank profits that can be set against carried-forward losses for tax purposes is to be limited to 50% per year.
A 25% rate of tax will be introduced on profits generated in the UK by multi-nationals that are diverted to another territory for tax purposes
The Government will continue its drive to close down aggressive tax avoidance schemes, including strengthening the rules on disclosure of schemes and widening the class of promoters of schemes.
This bulletin has been prepared from materials released before 1500 on Wednesday 3rd December 2014 by H M Treasury and H M Revenue and Customs and is for information purposes only and is subject to any subsequent release of information by Government bodies.