Partner Article

Autumn Statement 2013: The Verdict

If there was a word which summarised the 2013 Autumn Statement I would say “balanced”.

As ever with both the Autumn Statement and the Budget, the quickest way to understand who the winners and losers are is to look at the table of forecast costs and receipts which the Treasury publish alongside the speech. In the current Autumn Statement, the costs and receipts arising from the changes proposed are forecast to be equal over the next five years so it is clear that the Chancellor has not given much away at this stage.

There were perhaps less blatant vote winning changes than we might have expected, but the changes which were made appear to have been targeted at encouraging growth by tackling specific blockages on growth.

The key measures from a household income perspective are the confirmation of the increase in the personal allowance to £10,000 from April 2014, and from 2015 a new measure to allow married couples and civil partners to transfer £1,000 of their income tax personal allowance to their spouse (where neither spouse is a higher or additional rate taxpayer). Both measures will contribute to a potential reduction in taxation for households on lower incomes.

The bad news for many younger people is that it has been confirmed that the Chancellor expects people currently in their twenties and thirties to be working until they are in their late 60s or even 70 before they can qualify for the state pension. In view of the increasing life expectancies and the associated cost of pensions, this deferral of the state pension is not unsurprising.

For businesses, the Chancellor again has targeted specific areas where economic stimulus is needed. The main changes which will assist growth are related to fuel duty, business rates and employers’ National Insurance Contributions. The fuel duty escalator increase that was planned for September 2014 has been cancelled which will help to keep road fuel at more affordable levels and will help hauliers and other large scale users of road fleets.

A package of measures relating to business rates will help the high street retailers to compete with the online environment. The RPI increase in business rates is frozen at 2% for 2014/15 and there will be an extension of the Small Business Rate Relief for 12 months to April 2015. There will also be a discount introduced for certain retail premises and also a temporary 50% relief from business rates for new occupants of previously empty retail premises.

Measures to remove the employers NIC charge for staff between 16 and 21 years of age will encourage businesses to hire new staff in that age range, and this measure is something which is in line with one of the key areas where we believed the Chancellor could help to stimulate an acceleration in the job market.

The funding to pay for the majority of changes announced is coming from additional tax revenues being derived from tackling anti-avoidance. Many of the measures announced on anti-avoidance have been consulted on and so are not unexpected. The only potential surprise is that in some cases there was an expectation that lobbying from the financial sector may have watered down some of the measures; whereas in fact, some measures have been forecast as increasing the tax take compared to the Treasury’s initial forecasts at Budget 2013. The Coalitions stated appetite to tackle avoidance remains intact.

So overall the ethic of austerity remains. A sceptic might wonder if the Budget in March will deliver some more election-focused measures!

Alistair Wilson, Tait Walker Chartered Accountancy Practice tax partner.

This was posted in Bdaily's Members' News section by Alastair Wilson .