Paul Dixon and David Hammal, senior tax advisors at PwC, in Newcastle, give an expert view of the Chancellor’s Autumn Statement
YOU could be mistaken for thinking that George Osborne’s Autumn Statement was actually this year’s Budget.
Not only did the Chancellor announce his spending plans, but also included significant changes to tax policy.
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Overall, the changes announced yesterday will please many. The Chancellor announced a number of personal tax and business tax changes that will impact the region.
For both individuals and businesses, the cancellation of the proposed 3p a litre increase in fuel duty next month and the deferral of the proposed April 2013 increase to September 2013 will help already-stretched budgets.
This, together with the proposed improvements to the A1, will please the majority of our region’s motorists.
Central Government support to encourage a freeze on council tax increases and a £2.70 per week increase to the basic state pension will also be welcomed.
An increase to income tax allowances will have a positive impact on both low and higher earners. Also announced were small increases to the amount an individual can invest into their ISA and the capital gains tax free annual exemption.
Businesses will now be able to obtain tax relief on up to £250,000 of annual expenditure on plant and machinery – a ten-fold increase – which should encourage investment.
That, coupled with a further fall in the main rate of corporation tax to 21 per cent in 2014, will continue to encourage North-East businesses.
There was however some bad news for the North-East’s poorest and those with significant pension funds. People on benefits will see a cut in real terms with most working-age benefits to rise by only one per cent for each of the next three years and child benefit to rise by one per cent for two years from April 2014.
Those lucky enough to have significant pension funds, which will include many people in final salary schemes, will be disappointed, with reductions in both the lifetime and annual allowances for tax efficient pension contributions.
Elsewhere, the Government has reacted to recent highprofile tax avoidance and evasion schemes by announcing a further 2,500 tax inspectors and confirmed the introduction of a General Anti-Abuse Rule, with further details to follow.
Overall, the Chancellor did not deviate from Plan A the focus was on reducing the deficit, restoring stability, rebalancing the economy and equipping the UK to compete in the global race.
To the extent that the Government can make the UK a better place for business, this can only help the North- East with its strong experience of encouraging inbound investment and local businesses operating in global markets.