With tax receipts lower than expected despite strong economic growth, many had predicted that Chancellor George Osborne would have limited room for manoeuvre when presenting his last Autumn Statement before the 2015 General Election.
UK economic growth forecasts have been revised upwards to 3% for the current year, but the Chancellor conceded that the UK deficit ‘remains too high’ and that further ‘very substantial savings’ in public spending will be required. Revised forecasts from the Office for Budget Responsibility now predict Government borrowing of £91.3 billion this year, compared with its previous forecast of £86.6 billion.
The headline measure was a complete reform of stamp duty on residential property. The existing system will be abolished, with a new set of graduated rates – including a new 12% rate for the most expensive properties –applying with effect from Thursday 4 December.
The Chancellor’s speech also confirmed a package of reforms affecting small and medium-sized businesses, including a £400 million Treasury pledge to extend Government-backed Enterprise Capital Funds, together with plans to back up to £500 million of new bank lending to SMEs under the Enterprise Finance Guarantee. The R&D tax credit will also be increased for SMEs, while employer national insurance contributions (NICs) for young
apprentices will be abolished and the Employment Allowance extended to care and support workers.
Meanwhile, the Chancellor answered calls from leading UK business groups to review the business rates system, with some of the more immediate measures including an extension of the doubling of the Small Business Rate Relief by a further year from 1 April 2015 and extending the 2% cap on inflation-linked increases by another year.
Turning to personal taxation, the Chancellor confirmed plans to allow pensioners to take control of their pension pots from April 2015, adding that from this time the 55% ‘death tax’ on the annuities of those who die aged under 75 will also be abolished. The income tax personal allowance for 2015/16 will also see an additional increase, rising to £10,600, and will be accompanied by a corresponding increase in the higher rate threshold to £42,385.
In the run-up to the Autumn Statement, the Chancellor had already pre-announced a package of support for the NHS, UK road and rail infrastructure and flood defence schemes.
Other significant announcements included further anti-avoidance measures, an ongoing fuel duty freeze, and the abolition of Air Passenger Duty for under-12s from 1 May 2015.