OBR gives Chancellor room to manoeuvre...

With a surprise major U-turn over his intended Tax Credit cuts, George Osborne, the Chancellor of the Exchequer, delivered his joint Spending Review and Autumn Statement.

Despite this setback to his finances, from which he had hoped to save £4.4bn in welfare costs, he still maintains that he will be able to achieve £12bn of welfare saving each year up to 2020.

 

His main announcements were a pledge to bring the UK’s budget into a surplus of £10.1bn by tax year 2019/20, increase spending on the NHS by £6bn in 2016, whilst defence spending will meet NATO’s recommended 2% of GDP with a total spend of £178bn over the next decade. He will maintain the current budgets allocated to education, overseas aid, and the police force.

Housing will get a huge boost with him promising the building of 400,000 new homes, 200,000 of which will be ‘starter homes’. House builders and developers will be offered grants to achieve this target and incentives to regenerate brown-field sites for such development.

The basic State Pension will rise by £3.35 a week to £119.30, whilst the maximum flat rate New State Pension will be set at £155.65 per week. The newly introduced Automatic Enrolment pensions for all employees, will see the proposed increase in employer contributions to 2% of payroll, pushed back from 2017-18 to 2018-19.

Tax avoidance is to be targeted with the ambition of recouping £5bn of tax annually. They will introduce a General Anti-Abuse Rule with penalties imposed for disguised remuneration schemes, blatant stamp duty avoidance and the abuse of the intangible fixed assets regime and capital allowances. In future all tax returns for individuals will be digitalised and handled on-line by the end of the decade. As a result of this the HMRC will close 177 local tax offices.




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