Autumn Statement

The UK economy is picking up, but there will be no let-up in austerity.   People will be expected to work longer as life expectancy increases.  These are some of the headline messages from the Chancellor’s Autumn Statement issued on the 5^th December. 

A summary of the main points as they relate to farming and rural businesses are as follows;

• the growth forecasts for the UK economy from the Office of Budget Responsibility have improved.  The figure for 2013 has been raised from 0.6% at the time of the Budget (see March Bulletin) to 1.4%.  The growth forecast for 2014 has been raised from 1.8% to 2.4%. 
• despite austerity, there remains a large government deficit and it will not be until 2018/19 that the public finances will show a small surplus.  Consequently the total national debt continues to rise and this will peak at 80% of UK GDP
• departmental budgets in Whitehall (including DEFRA’s) will be cut by a further 1.1% in 2014/15 and 2015/16.  This equates to cuts of £19m and £18m per year
• the state pension age will increase to 68 in the mid-2030s and 69 in the mid-2040s
• as previously announced, the personal income tax allowance will rise to £10,000 from April 2014.  It will then rise by the CPI rate.  From April 2015 it will be possible to transfer part of the tax-free allowance between spouses or civil partners.  This will not apply to higher rate taxpayers and will be worth a maximum of £200 per year. 
• there is no change in the Annual Investment Allowance.  It is to remain at £250,000 until January 2015.  Despite lobbying from the farming industry there appears to be new incentive for investment in agricultural buildings and infrastructure. 
• Employers National Insurance Contributions will be abolished from April 2015 for under-21 year olds earning less than £813 a week.  This is claimed to apply to 1.5m young people
• An additional 20,000 Apprenticeships will be funded over the next two years
• Business Rate rises will be capped at 2%.  There will continue to be relief for Small Business and extra measures will be introduced to help small retail and food & drink businesses.  There will be a consultation in spring 2014 on wider reforms to the business rates system
• There will be changes to green taxation resulting in the average household electricity bill being £50 lower than it would otherwise be (although if wholesale prices rise, bills could well still be higher next year).  These changes do not relate to businesses
• fuel taxes will be frozen for the rest of this Parliament.  The paper Tax Disc will be replaced by an electronic system
• there will be additional funding to encourage house building – this may benefit some rural sites
• there is the usual statement on cracking-down on tax avoidance.  This includes new rules on the treatment of partnerships that have a mix of members – individuals and non-individuals such as companies.  In short, this will prevent large shares of any profit being allocated to the company in order to avoid tax in certain circumstances.