Madeleine Moon

Labour Candidate for Bridgend

The Autumn Statement 2014

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After March's Budget, the Autumn Statement is the most important financial and economic statement of the year. During the Statement the Chancellor of the Exchequer updates the House of Commons on the progress of the economy and the state of the public finances. 

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The Autumn Statement

And how it affects you...

After March's Budget, the Autumn Statement is the most important financial and economic statement of the year. During the Statement the Chancellor of the Exchequer updates the House of Commons on the progress of the economy and the state of the public finances. 

This year's statement, George Osborne's last before the General Election in May, contained a mixed bag of good and bad news on the economy, with deficit reduction still dominating policy there was no big tax cut or spending pledge, that is usually seen before an election, but a number of important changes were announced. I've outlined some of the most significant below.
 
Madeleine Moon MP
House of Commons
London
SW1A 0AA
Westminster: 020 7219 0814
Bridgend: 01656 750 002
madeleine.moon.mp@parliament.uk

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In Detail

Stamp Duty reformed

 
Reform of residential property stamp duty so that it is properly banded. At present, the duty owed can jump drastically if the price is just above a threshold. This reform bands the duty like other taxes like income tax are, and follows on from the SNP government in Scotland's reforms to Stamp Duty.
  1. 0% paid for the first £125,000 then 2% on the portion up to £250,000.
  2. 5% up to £925,000, then 10% up to £1.5m; 12% on anything above that, saving £4,500 on average priced home.
  3. This change will to come into effect immediately.

First ever Welsh Tax predictions


The Government's independent Office for Budget Responsibility (OBR) has for the first time estimated the likely proceeds from income tax, stamp duty land tax, landfill tax and the aggregates levy.

The Welsh government will get an additional £123m to spend next year as a result of the Autumn Statement. Around £71m of this comes by virtue of the Barnett Formula and is due to an increase in spending on the NHS in England. Most of the rest comes from the devolution of business rates next April.


They cover the taxes which are set to be devolved once the Wales Bill going through Parliament becomes law. The partial devolution of income tax powers is expected to be included in this, but will depend on the outcome of a referendum.
(Table below shows the OBR's predictions for Wales' tax. SDLT = Stamp Duty Land Tax)

The deficit and the Cost of Living 

  1. The deficit has been cut by around a half since 2010, but will still be £75.9bn next year meaning the government will miss its own deadline to cut it completely by the 2015 election. At the moment the public finances will not go into surplus until 2018 at the earliest.
  2. As a result debt as a share of GDP to rise to 81% next year. After this it should start falling reaching 73% in 2019-20.
  3. Prices have also risen faster than wages for 52 of 53 months since the last general election
  4. Tax and benefit changes have also hit families. Labour analysis of IFS figures says that families are on average £974 worse off this year because of tax and benefit changes since 2010. Average pay after inflation is now over £1,600 lower than in 2010 and the number of people who want to work full-time but can only get a part-time job is at a record high. 
  5. As a result of this tax receipts up to 2017-18 forecast to be £23bn lower than predicted.

Savings and pensions

  1. ISAs to be transferable to partners tax free.
  2. ISA threshold increases from £15,000 to £15,240 next April.
  3. Tax free annuities for dependents of people who die under 75.
  4. Commitment to complete public service pension reforms, saving £1.3bn a year.

Health and Social Care

  1. £2bn extra every year until 2020 for the NHS, leading to an increase in funding of around £71 million going to Wales as a result of the Barnett Formula.
  2. Employment Allowance extended to carers.

Banks, Multinationals and Tax Reform

  1. Rules allowing banks to offset losses made in the financial crisis against future profits will be tightened and banks could pay some £4bn extra in tax over the next 5 years.
  2. a 25% tax will be imposed on "profits generated by multinationals from economic activity in the UK which they then artificially shift" abroad. Expected to bring in around £1Bn a year over the next 5 years. The so called "Google" tax will target international giants like Google, Starbucks and Amazon that have been criticised for paying very little tax in the UK on very large revenues.
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