Now we've heard yesterday's Autumn Statement it's time to reflect on how it will affect families and the SME community.
The Chancellor, George Osborne, says Britain is headed in the right direction and I have no doubt that the announced changes to our tax system and policies – designed to be fiscally and tax neutral - will be felt by working families and the SME community.
Spending cuts are being implemented across several Whitehall departments and reinvested into ‘shovel-ready’ infrastructure including roads, rail and education.
It was pleasing to see that my predictions were nearly all confirmed or addressed. The implications of these changes will be felt by Britons, and across the SME community
What we heard
1 Tax avoidance of corporation tax
It came as no surprise that tax avoidance will not be tolerated with the Chancellor announcing that any loopholes within our tax system will be closed with immediate effect. Rather than cutting spending to the HMRC, more money will be invested to tackle tax avoidance and evasion.
In fact, £77 million will be provided to tackle this issue – and 2,500 more tax inspectors will be funded to go after the avoiders and evaders.
Furthermore, I was pleased to hear that the UK Government proposes to lead on working with other governments, including Germany and France, through the Organisation for Economic Co-operation and Development (OECD). They have an ideal opportunity to pursue this objective during their presidency of the G8 in 2013.
2. Personal allowances
The Chancellor not only confirmed the 2012 budget announcement that there will be an increase in personal allowances (the amount one can receive before paying any tax) from £8,105, he went further to announce an extra £235 to bring them up to £9,440 (when it was originally proposed to be £9,205) in April 2013.
This will help reduce the squeeze on household budgets and will again put money back into the pockets of working families. In fact, he said: “People working full time on the minimum wage, will have seen their income tax bill cut in half. And we are in touching distance of the £10,000 personal allowance.”
3. Fuel Duty
SMEs can breathe a sigh of relief that the widely expected news that the 3p Fuel Duty planned for January 2013 has been postponed. At least until September 2013.
While the obvious beneficiaries are working families and motorists, this will no doubt have a positive effect on the SME community which disproportionately feels the burden of increased transport costs.
He said: “It means that under this Government we’ll have had no increase in petrol taxes for nearly 2.5 years.”
What we didn’t hear
As predicted, the Chancellor didn’t comment on:
1. The introduction of Real Time Information
Employers will still be expected to start reporting payroll information in real time with the first of the changes being implemented from March 2013.
2. The re-launch of business record checks
The government’s fresh approach to checking up on taxpayers suspected of lax paperwork has begun.
3. The capping of reliefs
Although I expect we will hear more about this in the March 2013 Budget. Watch this space.
4. A reduced rate of VAT
Unfortunately, there was no mention of a reduced VAT rate by the Chancellor which could have helped to stimulate business growth in the SME market. Perhaps an opportunity lost?
Brian Palmer is Tax Policy Adviser at AAT.