The move follows the chancellor’s announcement in March’s budget that NI contributions for employers hiring staff under the age of 21 are also to be scrapped.
Osborne claimed that abolition of taxes for employers giving vocational training opportunities to young people is part of the government’s plan to see 3 million apprentices in place over the course of the next parliament.
“When a business is giving a young person a chance in life we’re going to support them, not tax them,” he said.
Increase in tax threshold
During his speech the chancellor also announced an increase in the threshold for tax-free income. The current rate is £10,000 and was due to rise to £10,500 in April. Instead this will now increase to £10,600. The chancellor claimed this will equate to a total wage increase of around £825 per year for the lowest earners in the UK.
Osborne also repeated the government’s eventual aim to raise the tax-free allowance to £12,500 per year, meaning that people on national minimum wage would pay no tax.
At the other end of the scale, the threshold for paying the top rate of 40% will increase from £41,865 to £42,385. This is the first increase in the higher threshold, in line with inflation, for five years.
No more ‘death tax’ on pensions
Additionally, the 55% rate of tax the relatives of deceased savers currently have to pay to transfer their pension funds will be abolished, Osborne confirmed in his speech.
In a welcome boost for the annuities market, anyone with a joint-life or guaranteed term annuity who dies before the age of 75 will be able to pass it on tax-free.
In his response to the Autumn statement, shadow chancellor Ed Balls accused the government of overseeing a 12-month period where apprenticeships have gone down, and ignoring continual sluggish wage growth.
“Wages have not kept pace with prices for 52 of the past 53 months,” he said. “Working people are now £1,600 a year worse off than they were in 2010.”