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What could the Autumn Statement mean for UK business?

Wednesday December 3rd, 2014

UK Chancellor George Osborne will deliver the final Autumn Statement of this parliament before May’s General Election this afternoon. So ahead of the full announcement, what can businesses expect from today’s Statement?

While the tradition may be for the Chancellor to offer some sort of giveaway ahead of the General Election in an attempt to placate voters, the continuingly high deficit combined with rising borrowing mean that any large scale giveaways seem unlikely.

A fiscal forecast from the Office of Budget Responsibility (OBR) has revealed that the UK’s total borrowing figure will be revised upward, with the complete Budget deficit expected to be £280 billion by 2020, £75 billion more than forecast.

In light of the outlook, what could be in store for businesses in the Chancellor’s Statement?

Tax

Analysts have predicted that the Chancellor will announce tougher rules on tax evasion in order to ensure big businesses are contributing to the economy as they should.

This could mean the introduction of new criminal proceedings for offshore tax evasion, and more powers to HMRC to enhance their ability to demand payments.

It is also possible that Mr Osborne will vary tax rates and personal allowances, perhaps to boost voter support.

Business rates

Businesses across the UK have not been shy in demanding an urgent reform of business rates from the Chancellor. The main complaint is that the methods of taxing business property is woefully outdated and in need of modernisation.

Many firms argue that taxing plant, property and machinery hampers the success of manufacturing or construction firms, while companies with similar turnover but less need for office or warehouse space, for example online retailers or design agencies, will be unfairly favoured.

Having already announced small business rate relief as part of the 2013 ‘help for the high street’ Autumn Statement, it seems highly likely that this will be extended or improved upon in the 2014 Statement.

NHS

According to Deputy Prime Minister Nick Clegg, the Statement is likely to include extra investment for the NHS, possibly to the tune of £1.5bn.

The funding will allow the NHS to cope with winter health demands and will signal a “step-change” in the way healthcare is funded.

He said: “I do not anticipate a great political standoff about this. If you look at what (Secretary of State for Health) Jeremy Hunt has said about the report by Simon Stevens, the NHS chief executive. It’s a compelling analysis about the needs the NHS now face.”

Devolution

During the recent referendum on Scottish Independence, the Better Together campaign stated that more powers would be delivered to Scotland regardless of the result. The Smith Commission was then convened to examine which powers should be devolved to Scotland, with its report published on 27 November.

The Commission has since recommended the devolution of further tax powers to Holyrood.

As these further powers are still subject to Westminster approval, it is likely that Mr Osborne will make reference to the devolution of income tax powers to Scotland in the Statement. Indeed, given the Conservative push for any devolution for Scotland to be tied to the issue of English votes for English laws, it would be surprising if further devolution to English councils was also not raised in conjunction with the Scottish announcements.

Furthermore, Mr Osborne has already indicated that he may recommend the devolution of Corporation Tax to Northern Ireland, so further debate on which taxes can be devolved to which parts of the UK will likely be fuelled regardless of what stance the Chancellor takes tomorrow.

The full Autumn Statement will be announced from lunchtime on 3 December.

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