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Key highlights from the Chancellor’s 2013 autumn statement

Planned introduction of a capital gains tax (CGT) charge on future gains made by non-residents disposing of UK residential property from April 2015
Under the current rules, only individuals who are classed as UK resident in the tax year of disposal (under the statutory residence test) are charged to CGT when selling or gifting a residential property located in the UK.  A consultation on how best to introduce the new CGT charge will be published in early 2014.
Planned reduction in the CGT private residence relief final period exemption from 36 months to 18 months from April 2014
At present an individual who owns and occupies their home is exempt from any CGT on sale of the property due to private residence relief.  If an individual has not occupied the property throughout his/her period of ownership there are various rules to calculate how much of any gain is tax-free and how much may be charged to CGT.  Assuming the individual has occupied the property as his/her main residence at some point during their period of ownership, any gain attributable to the last 3 years of their ownership is automatically tax-free whether they were living there or not.  The purpose of the planned reduction of this tax-free period from 3 years to 18 months is to reduce the incentive for those with multiple homes to exploit the current rules.
Transfer of personal allowance between spouses
Finance Bill 2014 will contain provisions for a non-taxpayer married to a basic rate taxpayer to be able to transfer £1,000 of their income tax personal allowance to their spouse or civil partner from 2015/2016.  This may help to ensure that the non-taxpayer spouse’s personal allowance is not wasted.
ISA subscription limits
ISA subscription limits for 2014/2015 will be £11,880 for a full ISA and ££3,840 for a Junior ISA and Child Trust Fund.
Abolition of employer National Insurance contributions for most under 21 year olds
From April 2015 employers will not have to pay NIC contributions in respect of employees under age 21 unless they are earning more than £42,285 per annum (£813 per week).
Increase in basic state pension
State pension will be increased in line with the triple lock in April 2014, being the highest of:

Average earnings growth



This equates to a cash increase of £2.95 per week for the full basic State pension. 
The government will consult on proposals to split the IHT nil rate band available to trusts created by the same settlor.  The current rules split the income tax and CGT allowances in such cases but the IHT nil rate band is only split if a settlor creates more than one trust on the same day.  Some high net worth individuals have created several pilot trusts on consecutive days with a view to gifting significant funds from various sources into the trusts at a future date with a much lower overall liability to IHT due to multiple nil rate bands.  It is not yet clear whether any legislation to change these rules will apply to trusts already created.
Although the government does not support the use of trusts by the very wealthy to avoid tax, the use of trusts to protect funds for the benefit of “vulnerable beneficiaries” continues to be supported.  Proposals were announced to extend the range of these trusts that qualify for favourable tax treatment and the government will consult further on this topic.  Currently vulnerable beneficiaries include children who have lost at least one parent and beneficiaries with disabilities such that they are considered incapable of managing their own financial affairs and are at risk of being exploited.
To read the full statement please click here