Chancellor George Osborne's key phrase today was 'economic security first' as he introduced his Spending Review, which sets out what Government spending will be over the next 4 years, and his Autumn Statement - an annual update on the economy today.
Much had been said about the impact of cuts in the welfare budget culminating in a House of Lords defeat on Tax Credits so it was not a complete surprise that the planned cuts of £4.4 billion in Tax Credits were abandoned.
Overall day to day Government departmental spending is to be cut by £20 billion. However police, health, education, international aid and defence budgets are protected whilst transport, environment and energy are the biggest losers.
Some of the highlights directly affecting contractors and small businesses included:
Plans to enable local authorities to retain all business rates collected. A proviso is local involvement in business initiatives.
- Even more resources being made available to HMRC to deal with tax avoidance and tax evasion. The £800m involved is savings from HMRC efficiencies and the introduction of the digital tax account.
- A raft of new criminal offences for tax evasion, increases in civil penalties for offshore evaders and requirements to correct past offshore non-compliance.
- An increase of £3.35 per week in April 2016 in the basic State Pension to £119.30.
- Tax-Free Childcare changes including a reduction of the upper income limit per parent to £100,000 and an increase in the minimum income level per parent to 16 hours at the National Living Wage.
- An apprenticeship levy of 0.5% of an employer's pay bill will be introduced in April 2017.
- Higher rates of Stamp Duty Land Tax (an additional 3%) will be charged on additional residential properties such as buy to let and second homes from 1 April 2016.
- From April 2019 a payment on account, within 30 days, of any Capital Gains Tax due on the disposal of residential property (will not affect properties eligible for Private Residence Exemption).
- Measures to reduce the excessive costs arising from whiplash claims with expected insurance premium savings of £40-£50 being passed back to customers.