George Osborne’s Autumn Statement 2011
The Chancellor George Osborne yesterday delivered his Autumn Economic Statement to the House of Commons in which he provided an update on the Government’s plans for the economy.
Although the June 2010 Budget set out the Government’s plans to reduce the country’s deficit and rebuild the economy, the recent euro crisis and higher than expected inflation rates have resulted in the Government now needing to take further action to ensure that it continues to protect and build a stronger economy for the future and that fairness prevails.
Although there were a number of areas highlighted in the Chancellor’s statement the main areas of focus, and the ones which are most likely to affect you, are as follows:
Building a Stronger Economy
For those of you in business who might have faced difficulties when trying to raise new finance, and subject to state aid approval, the Government is looking to make available £20 billion of guarantees for banks who will be able to secure lower borrowing costs, only if they agree to pass on the savings to the borrower – so you could see a reduction in the cost to your business of raising new finance.
Also, to offer an incentive for people to invest in new start-up companies, a new ‘Seed Enterprise Investment Scheme’ will be launched from April 2012 which will offer an increased 50% Income Tax Relief on the first £100,000 invested in qualifying new-start up companies.
The Government also announced that the current Small Business Rate Relief Scheme will be extended for a further 6 months from 1 October 2012 to 31 March 2013. If you have not recently reviewed your business rates and are unsure whether the Small Business Rate Relief may be applicable to your business why not give us a call and we can review your circumstances.
Corporation Tax Rates
The previously announced 1% reduction in Corporation Tax from 26% to 25% will go ahead as planned from April 2012.
Research & Development
The Government also announced plans to introduce a new ‘above the line’ tax credit for larger companies to encourage research and development, further details of this incentive will be announced in 2012.
Education & Young People
The Government will invest an extra £600 million to fund 100 additional free schools and in an attempt to tackle the causes of child poverty, as opposed to increasing welfare payments, will also invest further funds to extend the offer of 15 hours free education and care per week for disadvantaged two year olds. They will also introduce a youth contract worth £940 million which will fund wage incentives for private sector employers of young people to make it easier for them to take on young apprentices.
Housing Market
With regards to the housing market the current Stamp Duty Land Tax relief for first time buyers will end in March 2012 as planned, but the Government has set out plans for a number of schemes to increase house building, enable more people to own their own home and hopefully stabilise the housing market. If you are thinking of venturing onto the property market, or think your current mortgage may need reviewed, why not get in touch with one of our Wealth Management team who will make sure that you have the best deal.
Fuel Duty
In order to address the issue of fairness, the Government will defer for 6 months the 3.02p per litre fuel duty increase which was due to come into effect on 1 January 2012 and will also cancel the inflation increase which was planned for August 2012.
State Pension
Unfortunately, given the ongoing increase in life expectancy, the Government have brought forward to between 2026 and 2028 a planned increase in the State Pension age to 67. This change was originally due to take place between 2034 and 2036. They also confirmed that the full basic State Pension would increase by £5.30 to £107.45 from April 2012.
If you are approaching State Retirement Pension age and would like to know how much pension you can expect to receive when you retire, or would like to know how the changes to the State Pension system will affect you, please give us a ring.
Tax Credits
For anybody claiming Tax Credits the Chancellor announced that changes would be made which will reduce the amount of Tax Credits due to many families. Previously planned changes to the couple and lone parent element of the Working Tax Credits and a £110 increase in the child element of the Child Tax Credits will not now go ahead. There will however be inflationary rises in the disability element of Tax Credits and the child element of the Child Tax Credits, but a majority of other elements will remain at the same level as 2011/2012.
If you are unsure how any of the above changes might affect you or your business please do not hesitate to contact Lucy Metcalf.
Related News:
- The government has announced that from 6 April 2011 more individuals will be given increased flexibility in how they take their retirement income.
- Emergency Budget Announced
- Contracting Out of the State Second Pension will come to an end in 2012
- County to avoid the worst of the euro fallout, says new MD
- FTSE breaks 6000 mark