George Osborne, who for the past three years must have been tempted to shout “I’m the Chancellor, get me out of here”, has, without the help of Ant and Dec, seemingly clawed Britain out of its financial jungle and was able to be upbeat in his Autumn Statement with forecasts about the health of the economy much improved since the Budget in March this year.
The growth forecast issued by the Office for Budget Responsibility was 0.6% in March, for the current year. This has now been increased to 1.4%. Meanwhile, the percentage of debt to Gross Domestic Product has dropped from 7.5% in March, to 6.8%. This is down from 11% when the current Government came into power.
Spending cuts will, however, continue and there is no intention to significantly increase public spending any time soon.
But what about tax announcements? There were a few and, perhaps unsurprisingly, not all positive but many of them do not come into force for a number of years yet.
So let’s start with the positive news. For small businesses, the business rates relief, which was due to end in April 2014, has been extended by one year. Also any rate increases from April 2015 will be capped at 2% per annum. Further help for all business comes in the form of an exemption from April 2015 for employer national insurance contributions on all employees under the age of 21 who are earning less than £813 a week. This could help a number of care providers, as it is employers NIC that is exempt.
For individuals, the personal allowance was confirmed as rising to £10,000 in April 2014. In addition a new, transferrable, married couples allowance of £1,000, will be introduced for basic rate taxpayers in April 2015. This will automatically rise in line with any personal allowance increases.
Fuel duty is to be frozen next year, meaning that the price of a litre of fuel will be 20p cheaper than if the previous Government’s fuel escalator had continued to apply. A potentially helpful change for many domiciliary care providers.
As has become a regular announcement, more anti avoidance legislation is to be introduced. This will target individuals using companies to avoid an employer/employee relationship being created.
The biggest hits on the taxpayer came in respect of capital gains tax. Firstly, as was expected, non residents will be required to pay capital gains tax on any property held by them in the UK. This will apply from April 2015. There was more of a shock in respect of private residence exemption, which has remained untouched for years. Under current legislation, if the property has been your private residence at some point, the last three years of ownership is automatically exempt, regardless of whether it was your private residence at the time of sale. This is to be halved to 18 months from April 2014 and is expected to raise an additional £360m for the Government’s coffers by April 2019.
With just 18 months before the next election, the Chancellor must be quite happy with the message he’s been able to deliver although, as he pointed out, we’ve still got quite a way to go. Hopefully the recovery will continue and George Osborne will be able to dust off his Santa suit next spring to give everyone some Budget gifts. With a bit of luck this positive news may also translate into fee increases for care providers next April, they would be most welcome after several years of little or no positive fee news.