Autumn statement 2012

TaxOn 5th December 2012, George Osborne gave his 2012 Autumn Statement to Parliament. The proposals are as follows:

FUEL

  • The 3p increase in fuel duty, planned for next January, is cancelled.

BENEFITS AND PENSIONS

  • From 2014/2015 lifetime allowance to fall from £1.5m to £1.25m.
  • From 2014/2015 annual allowance to fall from £50,000 pa to £40,000 pa.
  • Legislation will be introduced in Finance Bill 2013 to make these changes and will be published in draft on 11 December 2012. The Government also announced that they will discuss with interested parties whether to offer a personalised protection regime in addition to a fixed protection regime.
  • Maximum Government Actuary’s Department rate (GAD) to rise from 100% to 120%.

STATE BENEFITS

  • Basic state pension to rise by 2.5% next year to £110.15 a week.Most working-age benefits to rise by 1% for each of next three years.
  • Child benefit to rise by 1% for two years from April 2014.
  • Local housing allowance rates to rise in line with existing policy next April but increases in the following two years capped at 1%.
  • Changes to welfare to save £3.7bn by 2015/16.

TAXES AND ALLOWANCES

  • Basic income tax threshold to be raised by £235 more than previously announced next year, to £9,440.
  • Threshold for 40% rate of income tax to rise by 1% in 2014 and 2015, from £41,450 to £41,865 and then £42,285.
  • Main rate of corporation tax to be cut by extra 1% to 21% from April 2014.
  • Inheritance tax threshold to be increased by 1% next year.
  • Bank levy rate to be increased to 0.130% next year.
  • £5bn over six years expected from treaty with Switzerland to deal with undisclosed bank accounts.
  • HM Revenue and Customs budget will not be cut.
  • ISA contribution limit to be raised to £11,520 from next April.
  • No new tax on property value.
  • No net rise in taxes in Autumn Statement.

ECONOMIC GROWTH

  • Predicted to be -0.1% in 2012, down from 0.8% predicted in the Budget.
  • Forecasts for next few years are: 1.2% in 2013, 2% in 2014, 2.3% 2015, 2.7% in 2016 and 2.8% in 2017.

GOVERNMENT BORROWING/SPENDING

  • Point at which debt predicted to begin falling delayed by a year to 2016/17.
  • Deficit is forecast to fall this year, as is cash borrowing.
  • Deficit to fall from 7.9% to 6.9% of GDP this year, and to continue falling to 1.6% by 2017/18.
  • Borrowing forecast to fall from £108bn this year to £31bn in 2017/18.
  • £33bn saving to be made on interest debt payment predicted two years ago.
  • Deficit fallen by a quarter in last two years.
  • Government spending as share of GDP predicted to fall from 48% in 2009/10 to 39.5% in 2017/18.
  • Spending review to take place in first half of next year.
  • Departments to reduce spending by 1% next year and 2% year after.

JOBS AND TRAINING

  • Unemployment expected to peak at 8.3%.
  • Employment set to rise in each year of the parliament.

TRANSPORT

  • Extra £1bn to roads, including upgrading A1, A30, and M25.
  • £1bn loan to extend London’s Northern Line to Battersea.

EDUCATION AND FAMILIES

  • £1bn to improve good schools and build 100 new free schools and academies.
  • £270m for further education colleges.

INFRASTRUCTURE

  • Ultra-fast broadband expansion in 12 cities.
  • £600m for scientific research.
  • Annual infrastructure investment now £33bn.
  • £1bn extra capital for Business Bank.
  • Gas Strategy to include consultation on incentives for shale gas.

OVERSEAS AID

Promise to spend 0.7% on development to be honoured next year, but not exceeded.

Thank you to the Compliance Services of SimplyBiz plc for putting together this summary of the Autumn statement 2012

If you need advice on the changes and how they may affect you, please give me a call on 01554 770022, and I will explain how I may be able to offer professional independent financial advice.

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