The most significant change announced was to Stamp Duty Land Tax (SDLT). With effect from midnight the way in which SDLT is calculated on the purchase of residential properties changes. Rather than the ‘slab system’ which has been in force, the amount of SDLT payable will be based on the amount of the purchase price within each band.

The highest rate of SDLT by individuals will now be 12% but it is suggested that 98% of property purchasers will be better off under the new system. For a house purchased for £300,000 the SDLT will now be £5,000 as opposed to £9,000, which represents a significant saving. Reference was made to the tax-free personal allowance. It was confirmed that the personal allowance for 2015/16 will increase to £10,600 as opposed to £10,500 previously announced.

Higher Rate Tax payers will also see the benefit of this increase. The Chancellor confirmed that this means 138,000 fewer individuals will pay tax at the higher rate. To help the cost of living, George Osbourne has confirmed that fuel duty will be frozen until 2016. In addition to this, Air Passenger Duty will be abolished for children under the age of 12 flying in economy class from 1 May 2015. The abolition will be extended to children under 16 years of age the following year. For businesses, those carrying out research and development will be pleased to hear that the rate of credit available will be increasing from next April.

For companies that are SMEs, the rate of relief available will increase from 225% to 230%. For large companies the above the line credit will go from 10% to 11%. Those employing individuals up to the age of 21 and apprentices up to age 25 will no longer have to pay Employers’ National Insurance on their salaries. The £2,000 employer allowance will also be extended to care workers. Young people wishing to continue in education will be entitled to a new student loan facility of up to £10,000pa when they study as a post-graduate.

Emphasis was placed on targeting tax avoidance within the UK. Measures will be introduced for multi-national companies that artificially divert profits offshore so that a higher rate of Corporation Tax is payable. On a smaller scale it will no longer be possible to claim Entrepreneurs’ Relief on the sale of goodwill to a company on incorporation.

Bryan Elkins Spofforths Tax Consultancy Services

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