George Osborne’s third economic statement of 2015 (and the fourth within 365 days) set out the state of the economy and spending plans for the next four years.
In a combined Spending Review and Autumn Statement, in which planned £4.4bn in tax credit cuts were abandoned, changes to government departmental budgets dominated the Chancellor’s speech.
Day-to-day spending of government departments will fall by an average of 0.8% a year in real terms.
The transport (37%), energy (22%) and business (17%) departments are facing the largest cuts. The core administration budget for culture, media and sport will fall by 20% but there will be increased funding for the Arts Council and sport.
NHS spending in England will increase from £101 billion in 2015/16 to £120 billion by 2020/21, including £6 billion next year. It is also expected to make £22 billion in efficiency savings in the next 5 years.
The economic news was largely positive. The combined effect of better tax receipts and lower debt interest has resulted in a £27 billion improvement in public finances compared to July.
The government will borrow £8 billion less than forecast and aims to have a budget surplus of £10.1 billion by 2020.
GDP is forecast to grow by 2.4% this year and has been revised up from July to 2.4% in 2016 and 2.5% in 2017.
Apart from the economic update, the Chancellor did announce some measures that will affect businesses and individuals. The following report summarises the announcements made by Chancellor George Osborne during the 2015 Autumn Statement on Wednesday 25 November 2015.
At a glance
Measures announced in Autumn Statement 2015 include:
Digital tax accounts
Every business and self-employed individual will have their own digital tax account by the end of the decade.
Small business rate relief
The small business rate relief scheme used by around 600,000 businesses will be extended for a year.
A levy of 0.5% of an employer’s wage bill will be introduced in April 2017. Each employer will have a £15,000 allowance to offset the levy.
The diesel supplement on company cars will not be abolished until April 2021.
The government has committed an additional £800 million to combat tax evasion and non-compliance.
The tax credit taper rate and thresholds will remain unchanged.
The new single tier state pension will be set at £155.65 a week from next year.
Capital gains tax
Capital gains tax will be due 30 days after the disposal of any residential property liable to capital gains tax from April 2019.
Housing benefit for new social tenants will be capped at the same level as the private sector.
Stamp duty rates on additional properties such as buy-to-lets and second homes will be raised 3%.
Parents of children aged 3-4 will be able to get 30 hours of free childcare a week from 2017 if they work over 16 hours a week.
London Help to Buy
People in London with a 5% deposit can get an interest-free loan worth up to 40% of a newly-built home.
Legislation will be scheduled to allow the devolution of income tax in Wales to be introduced without a referendum.
The £15 million currently raised from the VAT charged on sanitary products will fund women’s health and support charities.
Direct funding for student nurses will be replaced with loans for new students.
Part-time students will be able to apply to receive maintenance loans from April 2018.
Tuition fee loans
Tuition fee loans will be available for those studying higher skills in further education as well as postgraduates.
Reforms to the compensation of minor motor accidents will potentially mean savings for consumers of around £40-50 a year.
A copy of the full Autumn Statement can be found on our Client Resource Area https://clients.bwm.co.uk/ or by contacting us.