The Autumn Statement
Following recent Parliamentary events, the dust has now settled on the Autumn Statement and everyone has had the opportunity to analyse exactly what its
Essentially revised forecasts on economic growth, borrowing and tax receipts from the Office for Budget Responsibility allowed the Chancellor of the Exchequer some leeway to soften certain austerity measures, and to backtrack on previous announcements.
On the most sensitive issues the Chancellor abandoned his controversial plans to cut tax credits and scrapped expected reductions to police budgets. Elsewhere, he prioritised housebuilding and put pressure on businesses and buy-to-let landlords.
Going forward the UK Government now expects to borrow £8bn less than previously forecast, and intends to achieve a budget surplus of £10.1bn by 2020. The Office for Budget Responsibility (OBR) revised its predictions for economic growth and borrowing and the resulting forecasts of higher tax receipts and lower debt costs provided Osborne with some leeway to soften austerity measures.
Looking at the detail the Chancellor abandoned controversial plans to instigate cuts to working tax credits and child tax credits that aimed to save 4.4 bn. This U-turn will mean the Government will not stay within its welfare spending cap. Nevertheless, Osborne intends to generate £12bn in welfare savings by 2020, including further curbs on still housing benefit.
Although spending cuts were announced to certain government departments, budgets were protected in areas including education, defence and international aid. Elsewhere, in an unexpected move, the Chancellor scrapped plans to cut police budgets although the police will be required to achieve cost savings by merging back offices and sharing resources.
Beneath the headline issues other changes were announced that will impact on many people that were not anticipated. Firstly the Chancellor announced the introduction of a 3% surcharge on stamp duty on buy-to-let properties and second homes. The surcharge will take effect from April 2016 and is predicted to raise £1bn by 2021. Moreover, from 2019, capital gains tax will have to be paid within 30 days of the disposal of residential property.
The Chancellor also continued his attack on tax evaders with heightened penalties for persistent offenders. Osborne also announced a new penalty of 60% of the tax due for all cases successfully tackled by the General Anti-Abuse Rule. He also announced plans to ‘name and shame’ persistent offenders.
Elsewhere, there were some amendments to the eligibility rules for venture capital trust and enterprise investment schemes. As of 30 November 2015, those companies focused on the provision of reserve energy generating capacity and the generation of renewable energy that benefit from other government support no longer qualify under the schemes.
The Chancellor also confirmed October’s announcement that the uniform business rate will be abolished. Starting in 2020, local councils will retain the money collected from business rates and will have the power to cut business rates to attract business and boost growth.
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By Sabre Financial | Tuesday, December 01, 2015