George Osborne's autumn statement
George Osborne received a cold reception when he stood to deliver his autumn statement and was so loudly jeered that speaker John Bercow had to interject after just one minute to quieten the rowdy MPs.
However, the announcement that government borrowing and the deficit are declining, as well as the introduction of new investment plans and reduced tax liabilities seemed to score more favourably.
Corporation tax is to be reduced from 22% to 21%, which compares to 40% in the USA and 29% in Germany. George Osborne said: “The message is that businesses should come here, invest here and create jobs here. Britain is open for business.”
Annual investment allowance
There is to be a tenfold increase in the annual investment allowance for plant and machinery, from £25,000 to £250,000. George Osborne said: “This will cover 99% of all investment by businesses and is a huge boost to those who want to create jobs.” He also highlighted the hard work done in Burnley and Pendle in bringing this amendment to fruition.
The funding for UK Trade and Investment is to increase by more than 25% a year, aimed at helping British firms compete overseas and to paint the country as a destination for foreign investment. A new £1.5bn export finance facility is also to be launched which will support the purchase of British exports.
There was no large announcement on shale gas, which is likely to be farmed in part off the coast of Blackpool. George Osborne instead said that: “We are consulting on new tax incentives for shale gas and announcing the creation of a single Office for Unconventional Gas so that regulation is safe but simple.”
Petrol tax increase cancelled
The 3p-per-litre tax increase had been scheduled for January, while many believed that it would be postponed until April. However, the increase has been cancelled altogether.
High Speed 2, the rail network which is to run between London and Manchester in around 20 years’ time, will be explored further in the New Year by the transport secretary. Meanwhile, there has been a cap on rail fare rises for the next two years.
The income at which people start paying the 40% rate will increase by 1% year on year, from its current £41,450 to £42,285 in two years’ time. The personal tax allowance will increase from £9,205 to £9,440 next year. The tax-free allowance on pensions has reduced from £50,000 per year to £40,000 per year, meaning saving for retirement will become more expensive for around 1% of the population, whilst the overall ISA limit will increase to £11,520 in April.
The Treasury is to tackle ‘aggressive’ tax avoidance with the introduction of anti-abuse rules and the closure of tax loopholes. This is expected to result in an extra £7bn in revenue for the government, whilst bringing money home from unreported Swiss bank accounts is expected to generate £5bn over the next six years.