AUTUMN STATEMENT: How merchants are affected
Published: 10 December, 2012
The BMF has commented on the Chancellor's Autumn Statement, highlighting elements that could affect merchants.
Funds made available to build a further 120,000 new homes and some extra money to buy surplus public land. No new assistance for homebuyers, nor the re-introduction of Stamp Duty relief for first-time buyers up to £250,000.
£5bn over two years for capital investment that includes:
- £1bn for roads to upgrade parts of the A1, linking the A5 with A1, dualling the A30, and upgrading the M25
- £1bn to improve good schools and build 100 new free schools and academies
- Proposed High Speed 2 railway will be extended to North-West England and West Yorkshire
- A loan to London Underground to extend the Northern Line to Battersea
- Funds for flood defence schemes and broadband expansion (especially in smaller cities)
Local and regional growth
A new Business Bank will be established and operational from autumn 2014 to spend £1bn to stimulate long-term capital markets and improve lending to SMEs. Further funding promised for both the Regional Growth Fund and Local Enterprise Partnerships.
The Government looks ready to accept ideas put forward by Lord Heseltine in his “No Stone Unturned” Report. You can expect a greater share of public spending to be devolved out from Whitehall to local areas in future. For example, Local Enterprise Partnerships being able to bid for funds for transport & skills from April 2015.
All newly-built commercial property completed between October 2013 and September 2016 will be free from empty property rates for the first 18 months.
Budgets will be pruned further:
- Whitehall Departments cut by 1% this year and 2% next (only NHS & schools exempted)
- Local government budgets cut by 2% in 2014.
Low Carbon Britain
Carbon Reduction Commitment (CRC) - In the March Budget, Mr Osborne said he would abolish or reform this tax on big energy users. He now confirms the CRC will be kept but will be simplified in 2013. Watch this space.
Green Investment Bank - This Bank will not be allowed to borrow on the capital markets until the 2016-2017 finance year.
VAT - No news on how the UK Government intends to fight off the EU challenge to the reduced 5% rate for energy-saving measures. The BMF wants ministers to their nerve and fight Brussels.
Green Deal - No new incentives but none taken away. This means the £200 million announced last year for the cashback offer is safe. The scheme to allow customers to claim their allowable share of this (after a Green Deal Assessment is completed) will start in a few weeks.
The 3p per litre rise in Fuel Duty set for 1 January is cancelled. The BMF welcomes this move as it vindicates our efforts to campaign for this on behalf of merchants. The Government can boast it has not increased petrol taxes for nearly 2½ years.
In a surprise move, the Chancellor announced a ten-fold increase in the two-year Additional Investment Allowance Tax Relief for expenditure on plant and machinery up to £250,000.
Mr Osborne also revealed:
- Main rate of Corporation Tax will drop 1% to 21% from April 2014
- Annual exempt amount for Capital Gains Tax will increase by 1% in both 2014 and 2015
- Extra £77 million for HMRC to combat tax avoidance by individuals and multi-nationals
- Most benefits (including Jobseekers' Allowance, Employment and Support Allowance, and Income Support) to be uprated by 1% for the next 3 years
Disappointingly, the Chancellor did nothing to arrest the increase in Business Rates. The hope was to limit them to 2% in line with the cap on Council Tax and Government inflation targets. But he did extend the Small Business Rate Relief by another year from April 2013.