Chancellor announces new proposals
The Chancellor made some interesting proposals in his speech at the recent Conservative Party conference held in Birmingham. The first of these was a proposed freeze benefits for those of working age for a two year period and would come into effect from 2016 if the Conservatives win the next election. The Chancellor said that the freeze would save the exchequer over £3bn and that pensioner and disability benefits would be excluded.
The Chancellor also vowed to crack down on technology companies that work in the UK that‘go to extraordinary lengths to pay little or no tax here.’ The Chancellor is expected to introduce anti-avoidance measures in the Autumn Statement to stop these companies diverting profits earned in the UK to lower tax jurisdictions. Mr Osborne was clear that the UK offers some of the lowest business taxes in the world but that the taxes must be paid.
In a further announcement Mr Osborne promised to make further changes to pensions. This follows the most wide-ranging changes to pensions in many years that were announced as part of the Budget earlier this year. As part of these changes, the current rate of 55% for pension withdrawals for pensioners who choose not to purchase an annuity will be replaced by a charge to tax at marginal rates from April 2015.
The Chancellor has now vowed to abolish the 55% rate that continues to apply to pension pots left by savers to their children (aged 23 and over). Mr Osborne said‘the children and grandchildren and others who benefit will get the same tax treatment on this income as on any other, but only when they choose to draw it down.’