Autumn Statement 2014: What does George Osborne’s budget mean for you? From single parents to entrepreneurs

THE SINGLE PARENT

Catherine Gannon, 51
Managing partner of law firm Gannons
Gannons Commercial Law continues to perform extremely well as profits and earnings increase on last year. Catherine is commercially savvy and has recently restructured the business from an LLP to a Limited Company due to the new Legislation covering LLPs. This illustrates that Catherine is no doubt a smart operator in a segmented legal market place. Catherine lives with two children, aged 12 and 14, in a home with a mortgage and holds several investment properties.

BDO’s AUTUMN STATEMENT TEAM SAYS

Assuming Catherine is a higher rate tax payer who maintains her personal allowance, she will personally benefit from the increase in personal allowance and higher rate threshold, meaning an annual benefit of £172. The abolition of Air Passenger Duty (APD) for under 12s from 2015 will not help Catherine this year. However, from the following year this is extended to all under 16s, which could mean a reduction in the cost of an overseas family holiday. From a business perspective, yesterday’s announcements include some welcome measures such as the extending of the Small Business Rate Relief to April 2016 and an extension of the two per cent cap on the increase in the business rates calculator.

THE ENTREPRENEUR

Kristo Kaarmann, 34
Co-founder of TransferWise, a peer-to-peer international money transfer business, in Shoreditch
Kristo’s business is just over three years old. It has attracted $25m of investment from venture capital and private investors. The business is growing at over 10-15 per cent a month. He employs 50 people in the UK and a further 150 around the world, but he’s looking to grow these teams this year. He travels overseas twice a month to visit international offices and the firm’s US investors. Kristo owns property in Tallinn, Estonia, but rents in London. He cycles to work, takes a salary of £35,000 and doesn’t have a pension.

BDO’s AUTUMN STATEMENT TEAM SAYS

Kristo, as a UK business owner, is looking at the incentives to help grow his business. The announcement of the abolition of employers NIC on payments to apprentices under the age of 25 is good news in reducing the cost of employing new young staff. However, the announcement of country-by-country reporting could lead to an increase in Kristo’s costs for providing more detailed reporting to the UK on where his profits are made. From a personal perspective, Kristo will benefit from the increase in the personal allowance to £10,600, which is a benefit of £120 per annum.

THE FAMILY MAN

Martin Winter, 59
Partner, Taylor Wessing
Martin lives in Wandsworth with his wife in a home they own outright, without a mortgage. They have a son of 24 doing an MBA at a US university on a waterskiing scholarship and a daughter who works in marketing. Martin uses his car mainly at weekends, and flies on business trips. He is a keen water skier. Taylor Wessing recorded average earnings per partner of £544,000 last year. He saves through Isas and EIS.

BDO’s AUTUMN STATEMENT TEAM SAYS

Martin, as an additional rate tax payer (45 per cent), will not see any benefit from the increase in the personal allowance as he earns too much. However he will see a small benefit in the increase in the higher rate starting threshold. The freezing of the fuel duty will mean that an average motorist will expect to save £675 by the end of 2015/16. However, Martin’s benefit will be much less as he drives only at weekends.
There is some good news for Martin in terms of the increase in the ISA limits for tax-free savings as he will also be able to contribute an additional £240 per annum into his ISA. This same ISA can, following today’s announcement, be passed to his spouse on his death while retaining these tax-free benefits.

THE STARTUP FOUNDER

Oliver Pugh, 27
Founder of snack box service EarlyBird
Oliver’s business is four months old. It has attracted £84,000 worth of investment via the crowd funding platform Crowdcube. The business is currently growing at 100 per cent month-on-month and predicts year one revenues of £321,949. It currently employs four people and will look to grow this over the next 12 months. Oliver lives with his girlfriend in a rented flat in London. He drinks socially, but does not smoke. His savings have all been invested in EarlyBird, and from January 2015 Oliver will take a salary of £24,000 with no pension.

BDO’s AUTUMN STATEMENT TEAM SAYS

Today’s announcements to help small- and medium-sized business will be good for Oliver. The Small Company Business Rate Relief extension and cap on Business Rates combined with the NIC exemption for employing under 25s, means more savings for Oliver’s business and more liquidity for investment and building the business.
From Oliver’s personal perspective, the changes to Stamp Duty Land Tax are beneficial if and when Oliver buys, providing that the value of the property is below £937,500, while if the value is more than this rate Oliver will be worse off.
The increase to the personal allowance will benefit Oliver by £120.

THE APPRENTICE LIVING AT HOME

Hannah Bufton, 19
Higher Apprentice, PWC
Hannah is currently living with her parents while saving for a deposit for a flat. She earns a salary of £23,750. Hannah travels to work on the train and drives at the weekends. She also enjoys a glass of wine.

BDO’s AUTUMN STATEMENT TEAM SAYS

The changes to the Stamp Duty Land Tax (SDLT) rules will have particular relevance to Hannah who will presumably be looking to move out of her parents house and get on the property ladder.
The changes mean that SDLT is now a progressive tax and so Hannah will pay less in SDLT on her first home and none at all if the value is below £125,000.
If she paid the average price for a house in the UK, at £275,000, Hannah would save £4,500 on stamp duty under the new rules, compared with the previous arrangement.
Hannah, like Martin, will obtain some benefit from the freezing of fuel duty, which the government has estimated will save average motorists £675 by the end of 2015/6 .
However, as she only drives at weekends this will be limited.
Hannah will benefit from the increase in the personal allowance, which is expected to save £120 per annum from the increase to £10,600.

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