Chancellor George Osborne’s Autumn Statement was every bit as political as might be expected given that a general election will be held in May next year. With an economic cupboard looking pretty bare, he had little room for manoeuvre on tax giveaways. Instead, much was made of the recent improvement in growth figures for the economy. The Chancellor was assisted by a surprise revision showing improved growth and borrowing figures that was released today by the Office for National Statistics. There was also a series of barbed comments aimed at Ed Milliband and the Labour party and the predicted additional funding for the NHS.
However, there were a few announcements that will have a modest positive impact on local businesses. Business leaders had been lobbying for a change to business rates. There was no major reform, but an extension until April 2016 of Small Business Relief was announced as well as an increase in the Retail Discount to £1,500 for 2015-
There will also be help for businesses employing young people and apprentices. From April 2015 employers will no longer pay National Insurance for anyone aged 21 and under, or for apprentices under 25.
Businesses benefiting from recent falls in fuel prices will be relieved to hear that fuel duty rates will remain frozen.
The Chancellor was also keen to give something away to savers. The previously announced abolition of the 55% death tax on pension savings was mentioned again and the relief was extended to joint life annuities. These changes are likely to make pensions popular as an Inheritance Tax planning tool. An important change was also made to ISAs. From today, if you inherit ISAs from your spouse or civil partner not only will they be free of Inheritance Tax, but you can also keep their tax-
There was a small Income Tax giveaway for low and middle income earners with an increase in the personal allowance to £10,600 from April 2015, and an increase in the threshold for paying higher rate tax at 40% (the first increase in this level for several years).
But the final “rabbit from the hat” was a major reform of Stamp Duty on property. This was Osborne’s answer to Labour’s proposed “Mansion Tax”. Until now there were steep increases in stamp duty at each band because as the rate of duty increased, this was applied to the whole price paid. From tomorrow, Stamp Duty rates will be tiered so that no duty will be paid on the first £125,000 of the price paid, 2% will be paid between £125,001 to £250,000, 5% between £250,001 and £500,000, 10% between £500,001 and £1.5M and 12% over £1.5M. This ends the “cliff edge” system that distorted the property market. The new bands mean that 98% of homebuyers will pay less under the new system. Only those spending more than £937,500 on a home will pay more.
Whether today’s announcements will affect the political colour of the next government, only time will tell. All we can say is that there was a lot of hot air at Westminster today, but little in the way of big giveaways for voters.