Member Article

What are we expecting in the autumn statement?

George Osborne will be delivering his annual Autumn Statement on December 5th and whilst we can never be certain what is to be included, it is possible to make some educated guesses by scouring the media - which seems privy to some good quality tip offs - and by talking to economic experts. Based on our research and discussions, here is our round up of what could be in store next week.

Tax cuts for business?

There have been reports that there are plans to ease the pressure on businesses in order to bolster the economic recovery. However plans have already been introduced to reduce the rate of corporation tax for large companies and we have already seen an increase in the ever yoyo-ing capital allowances available to all businesses. Therefore any further ‘ease’ is likely to come in the guise of a reduction in business rates rather than to the rates of tax.

New capital gains tax for overseas buyers

Property prices are rising and one reason for this is the amount of activity from investment buyers within London. One way the Government plans to address this and hopefully control house price inflation is by introducing a special rate of capital gains tax for property buyers who are non-UK resident. Deputy Prime Minister Nick Clegg confirmed last week that discussions were underway on this and it is widely expected that the Autumn Statement will contain details of exactly what is proposed. Some are anticipating it will be a flat rate of 28% tax on the sale of all second homes in the UK owned by people registered as living overseas regardless of their income levels.

Mansion tax – will they or won’t they?

There have for a long time been rumours of the introduction of a mansion tax of 1% on properties valued at £2million or more. This has always been a very unpopular policy and we are not expecting this to be one of George Osborne’s announcements. Instead, it is possible that as an alternative a new higher-rate band of council tax will be introduced to cover more expensive properties.

Increase in personal allowance levels

There is pressure within the coalition to reduce the rate of tax for lower earners and it has pledged to slowly increase the personal allowance in order to lift more workers out of tax. We are expecting an announcement that the personal allowance will be increased to £10,500, if not from April 2014, then certainly before the next election. There are however tensions between the two parties as not all members believe tax cuts should only be aimed at the poorest in society; it will be interesting to see how these tensions play out.

Tax breaks for married couples

George Osborne revealed in July that we can ‘expect to see’ a tax allowance for married couples included in the Autumn Statement and that this will be transferable between spouses. The details of the proposal are however likely to reveal it is available only to couples earning within the basic rate band and that it will reduce their tax liability by only £250 a year; hardly warranting the publicity it will receive. Whilst it will please those who have long campaigned for the reintroduction of a tax break that recognises marriage, it inevitably will not go far enough.

This was posted in Bdaily's Members' News section by Lesley Stalker .