3 December 2014

Autumn Statement 2014

Earlier today 3 December 2014, the Chancellor of the Exchequer delivered his Autumn Statement to the House of Commons. There were a small number of announcements relevant to readers of this website. We will be updating the main sections of our website with more detail over the next few weeks:

Personal Allowances

It had previously been announced that the personal allowance (the amount of income you cna have in a tax year before you become liable to income tax) would be increased from 6 April 2015 to £10,500 (up from £10,000) for anyone born after 5 April 1948. Today the Chancellor increased it yet further to £10,600. 

The primary earnings threshold for employees' National Insurance Contributions (NIC) - that is, the point at which employees start to pay NIC - will remain more or less at current levels so that employees earning between that (£8,060 in 15/16) and the personal allowance will continue to pay NIC on that slice of their earnings, despite paying no income tax. 

Universal Credit work allowance

We have previously welcomed the news that the childcare element of UC will cover up to 85% of childcare costs in UC and that where a claimant leaves UC and returns within a 6 month period, they will undergo a simplified reclaiming process. The announcement that the work allowances within UC are to be frozen for yet another year, until April 2018, will mean that UC claimants do not see the benefit of increases in their earnings to the same extent as non-claimants. Furthermore, neither do those low-earning UC households reap the same benefits from increases in income tax personal allowances as of course, UC is tapered according to net pay - the higher the net pay, the less their UC entitlement. 

Tax Credit measures to restrict overpayments

From April 2015, where a tax credit claimant has a change in circumstances which reduces their entitlement, and their annual award is reduced accordingly, further payments of tax credits will be stopped in order to cut the build-up of overpayment by the end of the year. Previously HMRC would continue making payments which either created or increased an overpayment. While this will help with budgeting and prevent overpayments, the measure could cause real hardship for some who find the payment they have been relying on suddenly drying up. We will add more information about this measure to the tax credit debt section once it is available. 

Tax credits - eligibility conditions for self-employed claimants

The eligibility conditions for those claiming working tax credit as self-employed workers are to be tightened in line with similar restrictions that currently apply in European Economic Area migrant cases. Where someone is earning from self-employment less than the equivalent of 24 hours x NMW, they will be required to show HMRC that their self-employed work is genuine and effective. They will also be required to register their self-employment with HMRC and provide a Unique Taxpayer number when claiming working tax credit. We are currently seeking further information from HMRC on this proposal and will add information to the main self-employment section once the detail is known. 

All of the Autumn Statement documents are available on GOV.UK