The information contained within the following news articles have been pre published. The articles were published on the dates indicated and the information contained within these issues include references to taxation, legislation, regulation and other issues or concerns that may no longer apply
Autumn Statement Summary
Tuesday, the Chancellor, George Osborne outlined measures to support the economy whilst at the same time reassure markets. The Office of Budget Responsibility (OBR) have indicated growth in the UK for this year will be 0.9% and that next year’s forecast of 2.5% has been slashed to 0.7%. Longer term forecasts show 2.1% for 2013, 2.7% for 2014 and 3.0% for 2015. At least these figures show the OBR don’t think we will enter recession next year unlike the figures predicted by the OECD at the start of the week.
The OBR are now also predicting job losses within the public sector to rise from 400,000 to 710,000.
A Credit easing programme is to be introduced to underwrite up to £40bn in low-interest loans to small and medium sized firms as well as a £1bn business finance partnership to help raise money for medium sized companies.
Throughout the Autumn Statement it was made clear that if the Eurozone enters recession then this would likely push the UK into one too. As a result of the lower economic forecasts the OBR are forecasting an additional £111bn of public borrowing will be required over the next five years.
Despite the statement being made the day before the public sector strikes, the Chancellor announced a public sector pay increase cap of 1% for two years after the current pay freeze ends next year.
The increase in state pension age to 67 introduced by the Labour Government is to be brought forward by 8 years to 2026 saving an estimated £59 billion. The current state pension will increase by 5.2% which was the CPI figure for September. Anyone in receipt of working age benefits will see them also increase by 5.2% from April 2012. Some working tax credits will receive below inflation increases for 2012/13. This will include the child element of the child tax credit.
There will be a new Youth Contract, designed for young out of work people, which will subsidise the cost of private sector work experience. If the person involved fails to meet the terms of the contract then their benefits will be removed.
A new type of Enterprise Investment Scheme was introduced which will offer 50% Income Tax Relief as well as Capital Gains Tax relief for gains reinvested in the same year. Venture Capital Trusts also received a boost by the removal of the £1million cap for qualifying companies. Both of these schemes are seen as a way to boost investment in new businesses.
First Time Buyers will be disappointed by the announcement that the Treasury have stated that the Stamp Duty Land Tax holiday had failed and that they planned to scrap the scheme by March 2012. They have announced a Mortgage Indemnity Scheme which could help up to 100,000 people buy homes with as little as 5% deposit. In addition to this a 50% discount on tenants in England wanting to buy their council house.
Increase spending for education in England, including the doubling of childcare places for 2 year olds.
The planned 3p rise in fuel duty in January has been scrapped although it is still intended to rise by 3p in August whilst rail travellers will now see fares increase by 1% above inflation rather than the planned 3%.
A new infrastructure programme has also been announced with £5billion being invested over the next 3 years, including £1 billion on the rail network. Funding for some of this will come from the taxpayer, but also from two groups of pension funds who have committed £20 billion towards infrastructure over the next 10 years.
I have outlined most of the major issues that have been announced by the Government, however as the days and weeks pass we may get to see the finer details on some of these issues.
Chartered Financial Planner