Update: Autumn Statement and Spending Review 201530 Nov 2015
On Wednesday, George Osbourne made his Autumn Statement and Spending Review speech, the first since the Conservative government’s re-election, which provided an indication of how the UK economy will be managed in the short and long term. The announcements were focused on reducing government spending, consolidating UK economic recovery and encouraging further growth. For North-West SMEs there was a heavy focus on “the Northern Powerhouse”. Key points of the announcements are as follows:
• The UK economy is expected to grow by 2.4% this year, 2.4% in 2016 and 2.5% in 2017.
• An additional 3% stamp duty will be charged on the purchase of buy-to-let properties and second homes. Buy to let landlords with a property portfolio may therefore look to incorporate (subject to tax advice) as companies may not be charged the additional stamp duty (though previous budgets have increased duty on “enveloped dwellings”. Corporate landlords may also be entitled to full tax relief on debt interest (in constrast to the recent changes for private landlords).
• An apprenticeship levy will be introduced in April 2017 to create more apprenticeships. This will be a tax of 0.5% of all employers (regardless of whether they employ apprentices) whose annual salary costs are over £3 million.
• A Northern Powerhouse Investment Fund of over £400 million will be created to help small businesses grow by providing a combination of loan and equity finance to those who submit successful applications (subject to European Funding arrangements).
• £150 million will be invested to introduce an Oyster-card style ticketing system across the whole of the North.
• Local councils are to receive the full amount of revenue from business rates (up from 50%) by the end of Parliament. They will also be given the power to cut business rates.
• Following the success of the recent China collaborations, funding of £15 million will be provided to support further Northern Powerhouse trade missions, including to emerging economies.
• 26 new Enterprise Zones (areas where incentives are provided to encourage business investment) will be created or extended.
The government’s announcements show a strong commitment to strengthening the UK economy, particularly in the North, but it remains to be seen how these ideas will affect businesses in practice.