Business leaders react to the Autumn Statement
Business leaders across Wiltshire have been giving their reaction to the Autumn Statement, delivered by the Chancellor of the Exchequer, George Osborne, earlier this afternoon.
The chancellor reported that the UK was enjoying the fastest growing economy in the G7, which economic growth forecast at three percent.
He said half a million new jobs had been created this year – 85 percent of which were full time positions. Unemployment, he said, is set to fall to 5.4 percent in 2015.
And inflation is predicted to be 1.5 percent in 2014, falling to 1.2 percent in 2015.
In the finer detail, there was a reform of stamp duty, and fuel duty will be frozen. The higher rate income tax threshold is to rise to £42,385 next year, and a 25 percent tax on profits generated by multi-nationals that are shifted out of the UK, set to raise £1bn over five years, has been announced.
Research and development tax credit increased for small and medium-sized (SMEs) firms, and a £45m package of support for exporters was unveiled. National Insurance on young apprentices is to be abolished.
Swindon accountants Banks BHG welcomed some of the measures, including changes to stamp duty and a proposed review of the business rates.
But director Richard Mathews said he would like to have seen the Chancellor do more for businesses in general.
“The stamp duty change is welcome, as it will make life easier for house-buyers and help the housing market,” he said.
“Long-term he has promised a review of the business rates system, which has anomalies such as empty property rates, so that’s a welcome move. But he didn’t announce much to support businesses, although his headline grabber was the new 25 per cent tax for companies which shift profits overseas.”
One measure which might impact on micro businesses is the restriction of tax relief on incorporating. Richard said: “I am not sure what his thinking was there, but it may deter sole traders and small businesses from incorporating.”
Malcolm Emery, a tax advisor and solicitor at Thrings, said: “”While the revising of the growth forecast for this year to three per cent suggests the UK economy is continuing to perform solidly, the outlook for the global economy is not so certain.
“The Chancellor could have taken this opportunity to improve the UK’s export capability by reducing the standard rate of VAT.
“The Government continues to target non-UK domiciled individuals resident in the UK. While the current tax system offers such individuals benign tax status, the introduction of new tax charges needs to be carefully balanced.
“People with non-domiciled status in the UK contribute significantly to our nation’s economy, and there is a risk that punitive tax charges could prompt an exodus of talented and wealthy individuals and business owners from the UK.
“The news that corporate tax dodgers will now have to pay tax on the UK profits they would otherwise move offshore is likely to be welcomed by large sections of the South West business community.
“Mr Osborne has sought to generate more revenue for the treasury deficit, a timely move as the Government commences its preparations for next year’s general election.”
Stephen Depla, head of office at wealth managers Brewin Dolphin in Marlborough, said: “Whether it is new theatres, tax breaks or science investment, Osborne produced a statement to benefit non-Londoners with his plans for the regions… and even indeed for Mars.
“His plans for stamp duty will benefit those buying homes outside the capital, while the rest of his ‘Northern Lights’ strategy should provide even more regeneration across the country, which we see as good news for us and our 28 other offices and clients outside London.
“We really welcome the ability to pass ISAs intact to a spouse on death, a strategy we recommended to the Treasury. If you are drawing income from an ISA in retirement, suddenly discovering that income is no longer tax-free when your spouse dies is a huge blow. This allows people to plan properly and fairly for their old age.
“Radical reform of stamp duty irons out some huge anomalies, but for Londoners who have little choice but to pay prices that are out-of-kilter with the rest of the UK, this will be a small comfort as it maybe for the Scots, who have just heard details of their own new stamp duty regime following the Referendum.”
There was a mixed response from the rural economy. NFU director of policy Andrew Clark said: “The freezing of fuel duty for a further year, exempting apprenticeships from national insurance, and a further extension to small business rate relief all have the potential to help farmers.
“However it is disappointing that the changes to Stamp Duty Land Tax relate to residential property only.
“The Chancellor again suggested a need for a more balanced national economy but confined this to building a northern powerhouse in northern cities. We think there is a need to encourage business investment and growth in productive capacity throughout the whole of the UK.
“It is disappointing that no mention was made of the annual investment allowance or encouraging investment in business infrastructure or managing business volatility – some of the NFU’s key asks in our submission.
“Although news of tax relief for business contributions to flood defences is welcome, it is disappointing that flood-related announcements all relate to pre-planned capital expenditure and do not address our concerns over maintenance investment.
“We will study all relevant announcements in greater depth, including the government departmental spending reductions and assess the full impact of the Chancellor’s plans for agriculture.”
And Phil Smith, managing director of Business West and the Swindon & Wiltshire Initiative, said: “The Chancellor has delivered a crowd pleasing Autumn Statement for business.
“By focusing on key barriers to growth, such as Britain’s broken business rates system and the difficulty of accessing finance for growth, he has shown that he is committed to solving problems that hinder the growth aspirations of many firms.
“Prior to today, businesses asked for help to deal with business rates, infrastructure and apprentices, all of which were addressed in a positive Autumn Statement to close out a year which saw the country finally emerge from a damaging recession.
“This Autumn Statement included many actions to boost small businesses. Over 99 percent of the 87,000 plus registered businesses in our region are SMEs and further packages of support, such as the expansion of financial support for first-time exporters, increased rate relief and access to finance under the British Business Bank give these firms cause for celebration.
“Access to credit still remains stubbornly difficult for many small firms, despite the many interventions announced since the credit crunch, so it is too early to say whether the latest steps to encourage further bank lending will succeed.
“A major coup for business is that the Chancellor has committed the government to a fundamental review of business rates and doubled small business rates relief for a further year. This iniquitous tax is sapping good companies’ strength year after year, long before they make a single penny in profits.
“In the last week we have seen this evident in the extremes of black Friday and cyber Monday, illustrating the competition we see between the high street and online retailers. The business rates system has meant that this hasn’t been a fair fight, with one arm of high street retailers held back by this vindictive tax.
“Today is a step in the right direction and this review must deliver fundamental change and not get bogged down by short term political thinking.
“Although the business community is applauding measures announced today, as we head towards the general election there are still fundamental barriers to growth that need to be addressed.
“With a very difficult fiscal position for UK plc over the next five years, all parties will need to remain focused on making sure economic growth is central to their New Year manifestos”