Autumn Statement

Eden Accounting Ltd
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Autumn statement 2011
George Osborne disclosed his plans to re-invigorate
the UK economy yesterday and at the same time, stay focussed on debt reduction.
The pundits were forecasting a range of measures including: increasing the bank
levy, perhaps scrapping or delaying the January 2012 increase in fuel duty and
tinkering with the lower threshold for stamp duty to encourage first time
buyers. Additionally the coalition also disclosed additional measures to
stimulate the economy. Here’s a selection of the tax and other changes that were
announced today.
For the business community:
Tax changes:
Other boosts for the economy:
Benefits and pensions:

For the business community:
Credit easing: National Loan Guarantee Scheme
The
Government will make available up to £20bn of guarantees for bank funding over
two years. This should encourage banks to lend at lower rates to businesses. In
his speech, Mr Osborne speculated that this would reduce average rates by
1%.Credit easing: Business Finance Partnership
An initial
£1bn will be made available for investment in SME’s and mid-sized businesses in
the UK.Youth employment scheme
As previously announced the £940m
proposal to subsidise work placements for the young unemployed was confirmed.
Branded as the Youth Contract it will target 18 – 24 year olds. Extra support
will be provided by Job Centre Plus and will include provision of work
experience or a Sector Based Work Academy place.Those still in unemployment after nine months on Job Seekers Allowance will
transfer to the Work Programme that was introduced to help in the government’s
key aims of fighting poverty, supporting the most vulnerable and helping people
break the cycle of benefit dependency.

Additional incentives for employers include:

  • The provision of funding for an estimated 160,000 wage incentives, each
    payment to employers amounting to £2,275.
  • Further funding for at least 40,000 incentive payments to encourage smaller
    firms to take on apprentices.

Additional Government funding will provide £50m a year to support
disadvantaged 16-17 year olds.

Small Business Rate Relief

The present relief will be extended for a further 6 months from 1 October
2012.

Additionally there will be an opportunity to defer 60% of any increase in
business rate bills for 2012-13 as a result of RPI uprating. This will be repaid
equally in the following two years.

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Other boosts for the economy:
Infrastructure investment
The government is launching a
£30bn plan to improve national infrastructure. The first tranche of £5bn will be
provided by the government during the current parliament and a further £5bn in
the next. The Treasury is to seek a further £20bn in total from the National
Association of Pension Funds and the Pension Protection Fund. It is also
promoting investment from insurance companies and China. The Government’s share,
totalling £10bn will be funded from areas where there have been under-spends and
from a crack-down on tax avoidance.Schemes targeted for support include: the Trans Pennine Express line between
Leeds and Manchester, the Tyne & Wear Metro, and improvements to M25, M3 and
M56.Mortgage indemnity scheme
On the 21st November 2011 the
Government announced a guarantee for up to 100,000 new mortgages, at up to 95%
loan to value, for new build properties in England.Rail charges capped
The planned January 2012 increase in
regulated rail fares to be capped at 6.2% not 8.2%. This effectively limits the
increases for London and regulated rail fares to RPI plus 1% and not the
expected RPI plus 3%.

Water bills in the South West
Government is to fund South
West Water in order that bills for household customers are cut by £50 per
year.

Free childcare places
Places for deprived two-year-olds
are to be doubled to 260,000. This will involve Government investing a further
£380m a year by 2014-15 so that 15 hours of free education and care on a weekly
basis can be offered to those that need it the most.

Fuel duty change
The expected 3.02p per litre rise in
fuel duty due to take effect on 1 January 2012 has been deferred to 1 August
2012. The further increase of 1.92p per litre due to take effect from 1 August
2012 will be cancelled.

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Tax changes:
Bank levy increased
The promised increase in the bank
levy is confirmed. In order to meet the £2.5bn target each year from 1 January
2012 the rate of Bank Levy will increase to 0.088%Employers’ pension contributions
Employers making
asset-backed pension contributions to registered pension schemes will have tax
relief restricted to accurately reflect the amount of payments made.Seed Enterprise Investment Scheme (SEIS)
This new scheme
is to be set up to encourage inward investment into qualifying, new start-up
companies. SEIS will provide income tax relief at 50% for individuals who invest
in shares in qualifying companies. There will be an annual investment limit of
£100,000 and cumulative investment limit for companies of £150,000.There is also a capital gains tax exemption for investments realised in
2012-13 and invested through SEIS in the same year.

The existing Enterprise Investment Scheme
Changes
include:

  • Relaxation of connected person rules and definition of shares qualifying for
    relief.
  • Tighten the focus of the schemes by introducing a new test to exclude
    companies set up for the purpose of accessing relief.
  • Exclude acquisition of shares in another company and exclude investment in
    Feed-in-Tariffs businesses.
  • Remove the £1 million investment limit per company for VCTs to reduce the
    administrative burdens of the scheme.

Capital gains tax
The annual exempt amount for CGT is to
be frozen at present levels for 2012-13 at £10,600.

Capital Allowances: Enterprise Zones
Enterprise Zones in
six assisted areas will qualify for enhanced capital allowances. In these areas,
100 per cent allowances will be available for plant and machinery investment
incurred between April 2012 and March 2017. Zones are: the Black Country,
Humber, Liverpool, North East, Sheffield and Tees Valley.

VAT low value consignment relief
As previously announced
the VAT exemption for low value goods below £15 sent to the UK from the Channel
Islands will be removed from 1 April 2012.

Gifts of pre-eminent objects
New legislation is to be
introduced that will enable individuals and companies to receive a reduction in
their income tax, capital gains tax and corporation tax liabilities in return
for donations of pre-eminent works of art or historical objects.

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Benefits and pensions:
Welfare benefits
Most working age and disability benefits
will be increased in line with CPI from April 2012. The actual increase for
2012-13 will be 5.2%.Tax Credits
The child element of Child Tax Credit will be
increased in line with CPI and will rise by £135 per year in 2012-13. The £110
above inflation increase that was planned for 2012-13 will not go ahead.
The
disability elements of tax credits will be increased by reference to CPI. The
couple and lone parent elements of the Working Tax Credit will not be increased
in 2012-13.State Pension
The Government is standing by its triple
guarantee. From April 2012 a full basic pension will rise by £5.30 to £107.45
per week. The full couple rate where entitlement is based on their spouse’s or
civil partner’s pension will rise by £8.50 to £171.85 per week.State Pension age change
The increase in the age at which
the State Pension can be drawn is to be increased from age 66 years to 67 years
in 2026.

Public sector pay
From the end of the current pay freeze,
average public sector pay increases will be limited to 1% for a further two
years.

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DISCLAIMER – PLEASE NOTE: The ideas shared with you in this
email are intended to inform rather than advise. Taxpayers’ circumstances do
vary and if you feel that tax strategies we have outlined may be beneficial it
is important that you contact us before implementation. If you do or do not take
action as a result of reading this newsletter, before receiving our written
endorsement, we will accept no responsibility for any financial loss
incurred.
For further information please contact  Jan Rayner on 08452 707 738 or
Michael Prattis on 08452 707 740.Eden Accounting Limited
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PE28 2DB.
Tel: 08452 707 738 Fax: 01480 466161.Suite L3, South Fens Business Centre, Fenton Way, Chatteris, PE16 6TT
Tel:
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