Tax Video Update - Autumn Statement 2013
05 December 2013 •
Warrener Stewart Tax Update
Autumn Statement 2013
The Chancellor announced a number of changes, some potentially significant and some which come into effect immediately.
Capital Gains Tax - Principal Private Residence Relief
If you sell a property you have lived in, you may be eligible for Principal Private Residence Relief on the gain. Hitherto it has been possible to get relief for the last 3 years of the gain, even if you didn’t live in the property the whole time. That period will be halved to 18 months from 6 April 2014.
Residential Property owned by Non UK Resident Individuals
From April 2015, individuals who are non UK resident will face a capital gains tax charge on disposals of UK residential property. It is not clear at this stage whether the charge will be on the whole gain since you bought the property or whether it will just be on the gain calculated to have accrued since April 2015.
Abolition of NICs for Under 21s
From 6 April 2015, employers will not be subject to Class 1 secondary NICs on earnings paid to employees under the age of 21 up to the Upper Earnings Limit.
Personal Allowance Transfer between Couples
From 6 April 2015, someone who is earning less than the personal allowance will be able to transfer up to £1,000 of their personal allowance to their spouse or civil partner, provided their spouse or civil partner is a basic rate taxpayer, thus achieving an annual tax saving of up to £200.
Partnerships with Mixed Membership
HMRC are concerned that partnerships with a partner who is an individual and a corporate partner are being used to avoid tax: profits are allocated to corporate partners artificially so the individual partners pay less tax and losses are being allocated to individuals artificially so the individual partners get more tax relief. Constraints will be imposed from 6 April 2014. Anti-Avoidance rules are in place from today.
Dual Contracts
Legislation will be introduced in Finance Act 2014 to prevent high-earning non-domiciled individuals from avoiding tax by dividing up their employment artificially into two contracts, one UK and one overseas.
Personal Allowance and Higher Rate Threshold
The personal allowance will rise from £9,440 in 2013/14 to £10,000 in 2014/15.
The benefit of this for people on middle incomes will be offset by the fact that the threshold for higher rate tax is being reduced at the same time.