Today’s Autumn Statement was coupled with a Spending Review. His speech took many people by surprise given that there were relatively few announcements on forthcoming tax issues. Much of his speech was used for giving details on the Governments spending plans during the coming years.
In fact, he said so little about how the plans will be paid for, many people feel there must be more detail to come out over time or, and perhaps more worryingly, the bad news will come in the March 2016 Budget. However, he assures us that this is purely funded by lower costs incurred by the Government and higher than anticipated tax receipts through existing (and not new measures).
From a tax view point, there had been much speculation that Capital Gains Tax and in particular Entrepreneurs Relief would be targeted given the triple Tax Lock (Involving VAT, Income Tax and NIC), which fears proved largely unfounded.
We have therefore picked through the political announcements to bring you the details of the items which will affect the business environment.
Economic and Spending Announcements
- UK growth forecast was revised to 2.4% (2.3% in the May budget) for the forthcoming fiscal year, 2.4% next year, 2.5% for 2017, 2.4% in 2018 with 2.3% in 2019 and 2020.
- £12bn of cuts will take place.
- 1 million extra jobs will be created in the next 5 years
- This time last year the Chancellor believed that Britain would be in surplus by 2018 – this is now 2019/20.
- Annual borrowing will be £73.5bn this year – down from £74.1bn in May’s prediction. A £10.1bn surplus is still predicted to arrive in 2019/20.
- Debt as a percentage of UK GDP is now expected to fall every year to 71.3% in 2020/21, although the rate at which this happens accelerates towards the end of the term.
- £12bn of further capital investment spend.
- Tax credit changes to be abandoned moving forwards – a huge change of direction.
- By 2019 we will have digital tax accounts. This will ultimately mean less face to face interaction with HMRC as a cost cutting measure. Inspire feel this will lead to an acceleration of tax payments and cash flows to HMRC in some form of ‘live’ tax payments.
- As an initial announcement we already know that Capital Gains Tax will be payable within 30 Days of disposal of a property and not on your tax return.
- April 2016 will see an extra 3% Stamp Duty on second homes and Buy to Let purchases. This is in draft and more consultation will follow before implementation.
Other announcements and measures to be introduced
- £800m to tackle tax evasion – which should yield £8bn of income.
- Basic state pension will rise to £119 per week.
- 26 new enterprise zones – with attractive offers for new business. One of which will be in Dorset.
- Local authorities will have greater power to set business rates (both higher and lower!).
- Incentives for the energy industry – more details to follow.
- Government want to see an extra 1m apprentices by 2020 with an apprentice levy of 0.5%. However, there is a de-minimus of £15,000 so only very large employers should have to pay any form of charge/levy.
- Doubling of the housing budget to £2bn with the aim of helping people into home ownership. There will also be finance available to smaller building contractors to assist in the target of 400,000 new homes by 2020.
Things that we already know are changing soon:
- The taxation of dividends – this will affect all business owners who receive dividends.
- The Annual Investment Allowance reduction – please see our latest Blog – this changes on 31 December so please don’t ignore this if you are planning major capital expenditure.
Thank you for reading our summary and if you have any questions please feel free to get in touch.
Chris Downing, CTA, ACA, MAAT, Director, Inspire.