Thursday, July 9, 2020

More to the Autumn Statement than the u-turn on tax credits…

James Pinchbeck, marketing partner for Streets Chartered Accountants gives us his analysis of the Autumn Statement.

“As the first Budget of the new Government was only some four months ago, we perhaps would have been naive to think that there would be any significant changes to taxation affecting businesses or individuals. The first Autumn Statement, given by George Osborne as Chancellor of the Conservative Government, focused on aspects of public sector spending and plans to achieve a budget surplus by the end of its term of office. By 2019/20 the budget surplus was targeted to be £10.1bn. In his speech, which was well over an hour long, we were provided with the government’s long term economic plan.

There were only three specific announcements in relation to taxation. Firstly, and perhaps the headline grabbing statement was the plan not to change Tax Credits and the tapering of reliefs. Secondly, was the introduction of higher rates of Stamp Duty Land Tax (SDLT) from 1st April 2016, an additional 3% being levied on purchases of residential properties, such as buy-to-let and second homes. Thirdly, were the changes to the timing of payments on account for Capital Gains Tax due on residential property, with the requirement from April 2019 for such tax to be paid within 30 days of completion of the disposal.

To achieve his fiscal goals and to provide for a strong economy, the Chancellor is relying on generating increased tax revenue. With increased tax receipts based on the improved profitability of businesses and a focus on targeting anti-avoidance and evasion, as well as addressing the issue of the diversion of profits by businesses owned or controlled by overseas companies. This is along with proposals for making the UK a leader in digital tax administration, with a view to simplifying process, reducing errors and making it easier to collect/pay tax that is due.

Taxation aside, the Chancellor seeks to achieve his goals whilst at the same time, being committed to infrastructure investment, health, education and the security of the nation through reducing Whitehall’s public sector spending and reducing spending on welfare. It would seem most areas will see sustained and in some cases increased funding in real terms.

For potential homeowners and house builders came details of a five point plan, which through the use of various instruments and funding, seeks to support the provision of more homes and specifically the building of some 400,000 affordable homes by the end of the decade.

In terms of more regional and localised support, it would seem, whether you are a part of the Northern Powerhouse or the Midlands Engine, support has been pledged through proposed devolution, the election of mayors, the creation of new enterprise zones and investment in some major infrastructure projects.

Finally with optimism around the state of the economy and the state of the nation as we approach, or are already in, retirement, the proposed increase in the basic state pension must be welcome.

As always the devil is in the detail and it will no doubt take time for the profession and our counterparts to digest the announcements which are contained in a 146 page Treasury Document ‘Spending Review and Autumn Statement 2015’. The balancing act seems though to be around creating an environment where businesses can thrive, our workforce is well skilled, our public services meet the needs and demands of users and are delivered within budget and that we pay our taxes in accordance with the principles and ethics of taxation. We wait with baited breath the announcements that will be made in the Budget 2016.”

Based on these announcements, and in addition to the above commentary, Streets has produced a comprehensive Autumn Statement guide – to download your free copy please click here. You can also watch a video commentary on the Streets YouTube channel by clicking here.

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