Robert Brown, Tax Director at the Bristol office of BDO LLP, commenting on Chancellor George Osborne’s Autumn Statement said:
“In line with so many contemporary novels, George Osborne’s speech started with a great uplifting speech about the UK economy on the upturn and with the deficit under control. This was followed by a disappointing middle that was more about reacting to current political pressures than to really incentivising UK businesses. It ended in a crescendo, with the announcement of a cut in the tax on jobs for employers.
“However, apart from the announcement of the elimination of employers national insurance (NIC) for the under 21s from April 2015 and confirmation that the economy is turning, there was little real encouragement for businesses. It seemed a little ‘all show and no go’ and I suspect UK businesses will be disappointed and rather more interested in today’s Autumn Storm than the Autumn Statement.
“What is clear is that the Coalition want to test the economic recovery further before they make more radical moves, but they really only have one more chance in next year’s Budget, which is now looking like it could be the time for fireworks in the build up to the next election.
“Our clients tell us that they are more optimistic than at any other time in the last five years and want to take risks to grow, but only if the Government backs them. At a time when the Chancellor needed to be more forward thinking in his support for mid market businesses, unfortunately he was left wanting.
Business Taxation
“Lobbying around Business Rates has clearly borne fruit and Osborne’s cap on increases in Business Rates to 2% per annum is to be applauded and will help many high street retailers through the post-Christmas doldrums and the fierce competition that they face from online retailers.
“Other business rate measures to help smaller businesses with a 12 month payment plan, high street re-occupation relief and a £1,000 discount will all go some way to ease the burden. However, what we really need is a full scale review of the business rate system and not this ‘tinkering around the edges’.
“The strong message that tax avoidance will not be tolerated continues with the already announced anti-avoidance measures expected to collect an additional £9bn. However, this cannot be guaranteed and must be accompanied by a commitment to resourcing within HMRC.
“Also announced is a controversial measure that will force taxpayers to pay tax in advance if they dispute the tax treatment of tax schemes with HMRC. Some will regard this as overstepping the mark and is not fair on taxpayers generally so we can expect a big backlash against this.
“The elimination of employers national insurance (NIC) from April 2015 for the under 21s at a minimal cost of c£500m per annum should give a boost to all businesses to take on new workers to exploit the upturn in the economy and export opportunities.
Personal Taxation
“The transferable £1,000 married couples allowance is clearly a political headline grabber. With a benefit of only £200 per year and with limited numbers of couples who are expected to benefit, the impact of this is likely to be small.
“From April 2015 non-residents will have to pay capital gains tax on the profit they make on the sale of UK property. Again, the measure is a political headline grabber, although it will be interesting to see what impact this has on the inflated London housing market.
Cost of Living moves
“Free school meals for five to seven year olds under Clegg’s kitchen initiative, energy bills reducing by on average £50 per household and freezing fuel duty rises will all give some ‘feel good’ factor for consumers to encourage them to think that the corner has been turned and living standards are improving.
“Overall this was an underwhelming Autumn Statement which had a number of political ‘feel good’ measures within it but which didn’t really amount to much. The Chancellor has done nothing wrong, but it does smack of the Government keeping its powder dry, waiting to see if economic recovery continues as predicted and, if so, to allow them to launch a ‘firework budget’ next year.”
